What happened
Shares of Eli Lilly (LLY -0.12%) are tumbling Thursday morning. Specifically, the drugmaker's stock was down by a hefty 6.6% on heavy volume as of 11:15 a.m. ET Thursday.
What's sparking this downward slide? Ahead of the opening bell, Lilly announced its 2022 fourth-quarter financial results. The drugmaker's worldwide revenue sank by a noteworthy 9% in Q4 relative to the same period a year ago. Factors weighing on top-line results included:
- a stubbornly strong dollar
- a 96% drop in year-over-year COVID-19 antibody sales
- the loss of exclusivity for cancer medicine Alimta
- lower-than-expected sales of diabetes drug Mounjaro
So what
Lilly's shares were in the midst of a long bull run prior to today's pullback. Thanks to high expectations for newer growth products like Mounjaro and the steady progress of top clinical assets like Alzheimer's treatment donanemab, investors bid up the big pharma stock by a whopping 32.4% over the course of 2022.
Now, to be fair, the newly launched diabetes drug did book a healthy $279.2 million in global sales for the quarter. However, Wall Street analysts were expecting it to generate approximately $319 million in revenue in the fourth quarter. That's not a huge sales miss, but investors were clearly hoping Mounjaro could make up for declining COVID-19 product sales and Alimta's marked decline following the introduction of generic competitors.
Now what
Is Eli Lilly stock a bargain after today's hefty pullback? I think so.
The pharma giant's long-term value proposition remains intact despite these disappointing quarterly results. Lilly sports a top-notch clinical pipeline, which contains multiple potential blockbuster products. Moreover, the company has a track record of delivering blistering earnings growth over the past several years, as the chart below shows.
LLY Normalized Diluted EPS (TTM) data by YCharts.
As a result, bargain hunters probably shouldn't hesitate to take advantage of today's weakness in the stock price.
