Eli Lilly’s third quarter earnings miss and forecast cut lead to sharp stock drop

INDIANAPOLIS -- Eli Lilly is dialing back its 2024 forecast after underwhelming Wall Street with third-quarter earnings and sales from two key drugs that missed expectations.

The drugmaker on Wednesday chopped a few dollars off its earnings guidance after raising that forecast well beyond analyst expectations in previous quarters. Company shares slipped in trading after the announcement.

Sales of Lilly's diabetes treatment Mounjaro and weight loss counterpart Zepbound were hurt in the quarter as U.S. pharmaceutical wholesalers whittled inventory they had built up in previous quarters.

The company brought in $3.1 billion in sales from Mounjaro and another $1.3 billion from Zepbound, which debuted in the U.S. market nearly a year ago.

TD Cowen analyst Steve Scala said in a note that sales of both drugs missed expectations, and he wanted to learn more about whether the drop was a “temporary flattening or new trend.”

Leerink Partners analyst David Risinger said separately that although Lilly’s results were disappointing, he is keeping his “outperform” rating on the stock. He noted that Lilly “is just getting started in commercializing obesity products globally.”

Lilly CEO David Ricks told analysts Wednesday that demand for Mounjaro and Zepbound has been strong and continues to grow. He also said all doses were available.

Company leaders also said that versions of tirzepatide, the active ingredient behind Mounjaro and Zepbound, made by compounding pharmacies didn't have a huge financial impact on the company but posed a safety concern.

Lilly also said Wednesday that sales for another diabetes treatment, Trulicity, dropped 22% to $1.3 billion in the quarter.

The company also booked higher research and development and marketing, selling and administrative expenses compared to last year's third quarter.

Overall, Lilly earned $970 million, and adjusted results totaled $1.18 per share.

Revenue climbed 20% to $11.44 billion.

Analysts expected earnings of $1.45 per share on $12.09 billion in revenue, according to FactSet.

For the full year, Lilly now forecasts adjusted earnings to range between $13.02 and $13.52 per share. The company had predicted more than $16 per share in August, which was more than $2 higher than consensus at the time.

Analysts now expect adjusted earnings of $13.42 per share.

Lilly’s new forecast range falls mostly below what the company predicted in April. But earnings in the new range would still wind up being more than twice what the company registered for 2023.

Shares of Indianapolis-based Eli Lilly and Co. were down 6%, or $57.02, to $846.56 in midday trading while broader indexes rose slightly.

The stock price reached an all-time high of $972.53 in late August, according to FactSet. Shares have since retreated but were still up 55% so far this year, as of Tuesday.