Shares of Eli Lilly (LLY 1.19%) were jumping 5.4% as of 10:41 a.m. ET on Thursday after rising as much as 7.8% earlier in the day. The solid gain came after the big drugmaker announced its third-quarter results.
Lilly reported Q3 revenue of nearly $9.5 billion, up 37% year over year. This result was well above the consensus Wall Street revenue estimate of $8.95 billion. The company posted Q3 adjusted net income of $94.8 million, or $0.10 per share. Although this reflected a steep decline from the prior-year period, it was much better than the average analysts' estimate of a net loss of $0.15 per share.
NYSE: LLY
Key Data Points
Why did Lilly's Q3 revenue soar and earnings sink?
Most of Lilly's Q3 revenue growth stemmed from two products. Sales for type 2 diabetes drug Mounjaro skyrocketed more than 7x year over year to $1.4 billion. Sales for breast cancer drug Verzenio jumped 68% to a little over $1 billion.
However, there were other key growth drivers for Lilly. Four other drugs generated double-digit percentage sales growth in the third quarter -- Jardiance, Olumiant, Tyvyt, and Retevmo.
Why did Lilly's earnings sink with such strong revenue growth? The company recorded $2.98 billion in charges primarily related to its acquisitions of Dice Therapeutics, Emergence Therapeutics, and Versanis Bio.
Is Eli Lilly a good stock to buy now?
Lilly's growth will likely accelerate tremendously next year. The company hopes to soon secure U.S. regulatory approvals for Mounjaro in chronic weight management and donanemab in treating early Alzheimer's disease. Approval in the weight loss indication would almost certainly turbocharge Mounjaro's already fast-rising sales.
However, some of this anticipated growth is already baked into Lilly's share price. The stock trades at more than 43 times expected earnings. Still, I think Lilly's prospects over the next decade and beyond look great. The stock remains a good pick for investors to buy, in my view, even after its impressive gains in 2023.
