Lilly Trims Sales Target

Updated from 7:19 a.m. EDT

Eli Lilly ( LLY) swung to a second-quarter profit Friday as sales rose 5% from a year ago, but the company trimmed its full-year revenue guidance.

For the three months ended June 30, Lilly earned 76 cents a share, excluding special items, or a penny better than the Thomson First Call consensus. Revenue of $3.87 billion matched the average analyst estimate.

For the full year, Lilly said EPS would be in the range of $3.10 to $3.20 compared with the average analyst target of $3.13. Both predictions exclude one-time items. Lilly said full-year sales growth would be at the low end of its previously forecast 7% to 9% increase.

On a reported basis, Lilly earned $822 million, or 76 cents a share, on revenue of $3.87 billion for the second quarter. For the same period last year, Lilly lost $252 million, or 23 cents a share, on revenue of $3.67 billion. Last year's quarter was affected by a pretax charge of $1.07 billion, or 90 cents a share after tax. The charge was for settling lawsuits that claimed Lilly didn't adequately inform doctors and patients about the side effects of the schizophrenia drug Zyprexa.

Lilly's stock recently fell $1.34, or 2.4%, to $54.92.

As Lilly's biggest product, Zyprexa continues to command attention from analysts. For the second quarter, worldwide sales rose 2% from the year-ago quarter to $1.12 billion. U.S. sales slipped 1% to $542.9 million.

U.S. sales were affected by lower demand, which was partly offset by higher prices, Lilly said. The company sees "improving prescription trends" because U.S. prescriptions "have held steady" during the first half of the year.

However, at the beginning of the year, Lilly was counting on a better performance by Zyprexa, especially in the U.S., said John Lechleiter, president and chief operating officer, in a conference call with analysts. Slower-than-expected growth for Zyprexa and for insulin products are the main reasons why the full-year sales-growth forecast will be at the lower end of Lilly's predicted range.

Among other major products, worldwide sales for Cymbalta rose 92% to $310.4 million, including a 79% gain for the U.S. Cymbalta is prescribed for depression and for nerve pain associated with diabetes. Lechleiter said he expects the FDA to act during the first quarter of 2007 on Lilly's request that Cymbalta be approved for treating general anxiety disorder. Cymbalta also is in late-stage clinical testing as a treatment for the chronic-pain ailment fibromyalgia.

Sales of Strattera, for attention deficit hyperactivity disorder, advanced 17% to $144.1 million. Improvement was due mostly to reductions in U.S. wholesaler inventories last year and higher prices, "offset partially by a decline in demand in the U.S.," Lilly said.

The osteoporosis franchise produced mixed results. Evista's sales were $275.5 million, up 5% worldwide. Sales of Forteo climbed 43% to $146.1 million.

Cancer drugs also had a mixed performance. Gemzar's second-quarter sales were flat at $343.5 million worldwide, as U.S. sales slipped 3%. Gemzar is prescribed for treating cancer of the pancreas, breast and lung, and the Food and drug Administration just approved it for treating ovarian cancer.

Noting that some doctors prescribe Gemzar for ovarian cancer "off label," Lechleiter said incremental sales gains "will not be terribly significant." Doctors can prescribe a drug for any disease once the FDA approves it for a single condition, but companies can only market drugs for treatments approved by the government.

The lung-cancer drug Alimta recorded sales of $153 million, up 38% worldwide and 26% in the U.S.

Diabetes care products, which include insulin and other drugs to control blood-sugar levels, rose 5% to $701.7 million worldwide, including 6% in the U.S.

Lilly also said Friday it had signed an agreement with Alcon ( ACL), the world's biggest eyecare company, to co-promote a treatment for eye damages caused by diabetes. The drug, Arxxant, is still under FDA review for treating diabetic retinopathy. The companies will jointly market the drug in the U.S. and Puerto Rico.

More from Stocks

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker