The solid quarter came from a combination of increased foreign revenue and continued cost cutting. The adjusted earnings ignores the cost of its licensing deal with Boehringer Ingelheim for a piece of Boehringer's diabetes drugs and the $76 million in restructuring costs.
Can the company continue the trend through the patent cliff? Investors could only hope so.
After yesterday's beat, Lilly trades at a trailing P/E of 7.4. Astonishingly cheap, but that's because Lilly's earnings are expected to drop in 2012 after top-selling Zyprexa loses patent protection. While Zyprexa isn't as big of a drug as Lipitor, its loss is going to hurt Lilly more than Lipitor will hurt Pfizer
Investors are valuing Lilly at 9.6 times 2012 projected earnings. Whether that's cheap depends on whether Lilly can exceed analysts' expectations next year and what the future beyond 2012 looks like. Lilly's pipeline -- both internally and externally derived drugs -- is critical.
So far the purchases haven't worked out so well. Amyvid, which it got from Avid Radiopharmaceuticals, failed to gain Food and Drug Administration approval last month and liprotamase from Alnara Pharmaceuticals got turned down last Friday.
One bright spot is that Lilly is close to gaining full approval of Amylin Pharmaceuticals
Whether Lilly is a value or a value trap at this point depends on a lot of unknown factors. There's a nice 5.4% dividend yield if you're willing to invest blindly, but cautious investors would be better off watching the landing as it falls off the patent cliff before investing.
Can't wait? Here are 13 high-yielding stocks you can buy today.
Pfizer is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.