Eli Lilly (LLY 0.87%) was one of the best and safest healthcare stocks you could have bought last year. Its 32% returns in 2022 dwarfed those of the S&P 500, which fell 19% amidst the worst year the stock market has endured since the financial crisis. Despite macroeconomic headwinds, Eli Lilly generated positive year-over-year growth. And its results could be even better this year.
Eli Lilly expects solid profit growth in 2023
Last month, Eli Lilly released its updated guidance, which covers the year ahead. For 2022, the healthcare company is projecting that its top line will come in between $28.5 billion and $29 billion, which wouldn't be far different than the $28.3 billion it reported in 2021. But its earnings per share (EPS) could reach $6.65, which would represent a more impressive 9% increase from the previous year.
NYSE: LLY
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That's a good, modest growth rate for the business. And Eli Lilly investors can expect an even better performance in 2023. For this year, the company is projecting sales to rise to up to $30.8 billion. While that may seem underwhelming, it's due to several factors: a loss in exclusivity in oncology medicine Alimta, no COVID-19 antibody revenue, and a negative impact from foreign exchange.
Despite those headwinds, the company is still expecting sales to rise further this year. Meanwhile, EPS could come in as high as $7.85 -- which would be an 18% increase from the top end of the EPS it's expecting for 2022.
This bodes well for income investors, who are banking on another big dividend increase in 2023. Last year, Eli Lilly announced a 15% hike to its payouts, marking the fifth straight year it has made such a generous increase to the dividend. With further strong results in 2023, that could extend this streak to six years. The stock currently yields 1.2%, which is below the S&P 500 average of 1.8%.
Multiple product launches on the horizon
This year could be a busy one for Eli Lilly as the company sees multiple potential catalysts that could help both its financials and its share performance. Some of the products it believes it might launch this year include Alzheimer's treatment donanemab, ulcerative colitis treatment mirikizumab, atopic dermatitis drug lebrikizumab, and pirtobrutinib, which treats patients with chronic lymphocytic leukemia.
An underrated development that may not generate significant sales this year but could light a fire under the stock is the regulatory submission of tirzepatide to treat obesity. It's approved for diabetes, but if tirzepatide gains the green light for obesity, it could unlock a huge growth opportunity for the business and likely generate significant bullishness.
Is Eli Lilly's stock a buy?
Since 2020, shares of Eli Lilly have soared 176% while the S&P 500 has risen by just over 20%. And that's a trend that I can see continuing, especially with the potential the company has to achieve more growth in the years ahead, particularly with donanemab and tirzepatide.
Although its dividend may appear uninspiring, that's a testament to how well the stock has been doing; if not for such impressive gains over the past few years, Eli Lilly's yield would be much higher. However, that's not a trade that most investors want to make.
Eli Lilly's impressive fundamentals and promising growth prospects make it one of the best healthcare stocks to buy and hold right now. Even though it's trading at more than 50 times earnings, in a few years the stock could look like a cheap buy, as its bottom line is only going to get stronger.
