Analysts Boost Eli Lilly's Forecast With High Hopes On Mounjaro, Zepbound Performance

Tuesday, Eli Lilly And Co LLY reported fourth-quarter of 2023 revenue of $9.35 billion, up 28% Y/Y, beating the consensus of $8.93 billion driven by increases of 16% due to higher realized prices, 11% in volume, and 1% from the favorable impact of foreign exchange rates. 

New Products revenue grew by $2.19 billion to $2.49 billion in the quarter, led by Mounjaro and Zepbound. Growth Products revenue increased 9% to $5.27 billion, led by Verzenio and Jardiance.

In its fourth quarter 2023 earnings released, Eli Lilly reported results from the SYNERGY-NASH Phase 2 study of tirzepatide in adults with nonalcoholic steatohepatitis (NASH), also known as metabolic dysfunction-associated steatohepatitis, which met its primary endpoint where up to 74% of participants achieved an absence of MASH with no worsening of fibrosis at 52 weeks, compared to nearly 13% of participants on placebo.

The company also said that Verzenio added to abiraterone did not meet the primary endpoint of improved radiographic progression-free survival in men with metastatic castration-resistant prostate cancer in the Phase 3 CYCLONE-2 study.

BMO Capital notes that the Wall Street estimates once again underestimated tirzepatide growth as demand continues to outpace supply. BMO raised the price target from $710 to $865. 

BMO writes that the market perceived the SYNERGY-NASH results negatively in relation to other MASH assets. However, there is still uncertainty about the extent to which tripeptide reduces liver fibrosis, creating the possibility of developing more targeted MASH treatment agents.

Morgan Stanley reiterates the Overweight on Eli Lilly with a price target of $805 and expects the Mounjaro/Zepbound launch to drive upward revisions to revenue estimates and margin expansion, albeit at a more measured pace in 2024. The company has the most robust growth profile within Morgan Stanley’s coverage universe.

BofA Securities notes that despite Lilly’s high valuation, there is still significant potential for growth. The analysts maintain their Buy rating and have raised the price target to $800, up from $750, citing increased confidence in Lilly’s combined clinical and commercial portfolio.

Truist analysts await further p-values at a future scientific presentation on the tripeptide SYNERGY-NASH Phase 2 study and more updates on Eli Lilly’s next steps for NASH. The analyst maintains the Buy rating with a price target of $850.

Price Action: LLY shares are up 3.48% at $729.55 on the last check Wednesday.

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