"We see the opportunity for substantial operating leverage post-2016 as the diabetes franchise accelerates and the oncology franchise broadens," Leerink said in an analyst note this morning.
Before the market open on January 5, Eli Lilly is expected to set its 2016 earnings guidance below consensus of $3.67 per share because of less benefits from foreign exchange rates.
The company's latest Alzheimer's disease treatment, solanezumab, could drive sales growth in 2017, following the results of the Phase 3 studies, due out in late 2016.
"We see upward of $5 billion sales potential if solanezumab and follow-on products demonstrate efficacy for Alzheimer's disease," analysts added.
Eli Lilly stock closed at $85.85 on Thursday.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate LILLY (ELI) & CO as a Buy with a ratings score of B. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LLY's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 1.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Pharmaceuticals industry average. The net income increased by 59.7% when compared to the same quarter one year prior, rising from $500.60 million to $799.70 million.
- The gross profit margin for LILLY (ELI) & CO is currently very high, coming in at 82.71%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, LLY's net profit margin of 16.12% significantly trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Pharmaceuticals industry and the overall market on the basis of return on equity, LILLY (ELI) & CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: LLY