Eli Lilly Drops 5% As Q4 Revenue Misses Estimates

Key Insights

• Eli Lilly stock declined by more than 5% as the company’s revenue missed analyst estimates. 
• Weak sales of diabetes drugs and slowing demand for COVID-19 antibodies served as main catalysts for the sell-off. 
• The company raised its earnings guidance for 2023 but traders remained skeptical. 

Eli Lilly Sales Slow Down As Demand For COVID-19 Antibodies Declines

Eli Lilly stock found itself under pressure at the start of the trading session as traders reacted to the company’s forth-quarter earnings report.

The company reported revenue of $7.3 billion, down 9% from the revenue of $8 billion in the fourth quarter of 2021. Eli Lilly’s revenue missed analyst estimates, while adjusted earnings of $2.09 per share exceeded estimates.

The company increased its adjusted earnings guidance for 2023 to $8.35 – $8.55 per share. The 2023 revenue guidance remains unchanged at $30.3 billion – $30.8 billion.

While the company’s earnings exceeded analyst estimates, traders focused on the slowing sales of diabetes drugs and COVID-19 antibodies. Eli Lilly hopes that demand for its new diabetes drug Mounjaro will increase in 2023, offsetting the weaker sales of its older drugs, but the market remains skeptical.

Eli Lilly Stock Drops 5% As Report Shows That Company’s Growth Is Slowing Down

Eli Lilly is an expensive stock which traded at more than 40 forward P/E ahead of the earnings report. Such valuation levels imply strong growth, so it’s not surprising to see that traders focused on the revenue miss and rushed out of Eli Lilly stock after the release of the earnings report.

It should be noted that Eli Lilly earnings estimates have been moving lower in recent months. The company’s updated earnings guidance is higher than the analyst consensus for 2023, but it remains to be seen whether traders will be ready to buy the pullback as the stock remains expensive.

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