LLY and NOVO Report Strong Earnings But Are Vulnerable to Q4 Headwinds
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LLY and NOVO Report Strong Earnings But Are Vulnerable to Q4 Headwinds

Eli Lilly and Novo Nordisk continue to capitalize on unprecedented interest for weight-loss drugs, with both companies posting strong Q3 results on Thursday.
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Pharmaceutical giants Eli Lilly (NYSE: $LLY) and Novo Nordisk reported solid Q3 earnings results, driven by exceptional demand for their blockbuster obesity and diabetes drugs. However, while both of them remain extremely lucrative, the two companies are likely to face headwinds in the coming period, with Eli cutting its Q4 outlook. At the same time, Novo struggles to raise the supply of its most popular drugs. 

Weight-Loss Drugs Drive Growth for Eli Lilly and Novo Nordisk

Eli Lilly reported better-than-expected Q3 results on Thursday, propelling the stock slightly higher in Thursday premarket trading.

The company posted Q3 adjusted earnings per share (EPS) of 10 cents, notably better than the projected loss per share of 13 cents. During the quarter, Eli Lilly incurred a loss of $57.4 million, compared with a $1.45 billion profit from the year-ago period. When not considering excluding one-time items, Eli Lilly reported a per-share profit of 10 cents.

Revenue came in at $9.50 billion, up 37% year-over-year and above the consensus estimates of $8.95 billion. The revenue increase was mainly fueled by strong demand for the company’s antidiabetic medication, Mounjaro, and other treatments such as Verzenio and Jardiance. 

Meanwhile, Eli Lilly’s European competitor, Novo Nordisk, also posted solid Q3 earnings, driven by the ever-growing popularity of its weight-loss drugs. 

Notably, Novo generated sales of 58.7 billion Danish kroner ($8.3 billion) in the three-month period, representing a year-over-year jump of 38% at constant exchange rates. Quarterly earnings stood at 5 Danish kroner per share, up 58% from last year and above Wall Street’s projection of 4.81. 

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Eli Lilly Cuts Q4 Outlook; Novo Nordisk Remains Bullish

Although its Q3 top and bottom lines were solid, Eli Lilly’s expectations for full-fiscal 2023 results were not as promising.

The pharma behemoth trimmed its adjusted EPS guidance for the year to $6.50 to $6.70, significantly below the previous range of $9.70 to $9.90. However, the company reiterated its full-year revenue outlook of $33.4 billion to $33.9 billion. 

Elsewhere, Novo Nordisk was more bullish when it comes to future performance. The Denmark-based drugmaker estimates 2023 sales to grow between 32% and 38% year-over-year, up from its previous forecast range of 27% to 33%. 

The company’s robust results come amid strong interest in its blockbuster anti-obesity medications Wegovy and Ozempic, which have disrupted the industry over the past year. However, the drugmaker continues to struggle to raise the supply enough to meet demand.

Novo’s market value soared to around $430 billion in the wake of strong growth, making it one of the most valuable healthcare businesses in the world. 

Analysts at Morgan Stanley expect the weight-loss market to continue growing rapidly, which could serve as a catalyst for the stocks of companies developing such treatments. 

Do you think stock prices of Eli Lilly and Novo Nordisk will continue trending upward in the long run? Let us know in the comments below.