BofA On Eli Lilly: Disappointing Q3 Comes In Otherwise Strong 2020

Eli Lilly And Co’s LLY third-quarter results show the persisting impact of COVID-19 and pricing headwinds, according to BofA Securities.

The Eli Lilly Analyst: Geoff Meacham maintained a Buy rating on Eli Lilly with a $180 price target. 

The Eli Lilly Thesis: The downbeat third-quarter results could exert pressure on the company’s stock, Meacham said in the note.

Eli Lilly missed both top- and bottom-line estimates for the quarter.

In the third quarter, the company “saw an impact from pricing pressures (+5% sales growth, +9% volume growth) particularly with Trulicity and increased expenses (+9% y/y), which was driven by COVID-19 development expenses ($125M),” the analyst said.

Lilly's year-to-date growth “still remains strong / differentiated which is a key part of the story, with revenues growing +6% (driven primarily by volume growth),” he said. 

Lilly maintained the 2020 guidance for revenue and non-GAAP earnings, “assuming a rebound in healthcare activity and modest pricing headwinds from patient affordability programs and changes in segment mix,” Meacham said. 

LLY Price Action: Shares of Eli Lilly were down 6.14% at $133 at last check Tuesday.