On Wednesday, Wells Fargo (NYSE:WFC) reiterated its Overweight rating and $1,000.00 price target on Eli Lilly (NYSE:NYSE:LLY) shares despite the pharmaceutical company's fourth-quarter revenue falling short of market expectations. Eli Lilly reported a revenue of $13.5 billion, missing the consensus estimate of around $14 billion.
The shortfall was attributed to weaker-than-expected sales from its Mounjaro and Zepbound portfolio, which totaled $5.4 billion compared to the anticipated $6.5 billion. According to InvestingPro data, Eli Lilly's revenue growth remains robust at 27.41% over the last twelve months, with analyst price targets ranging from $580 to $1,250.
Wells Fargo analyst noted that the revenue miss was somewhat anticipated due to prescription trends and does not necessarily indicate a demand issue. The company has been building its supply capabilities in Puerto Rico, suggesting that the miss is more related to supply constraints rather than a lack of consumer interest.
Despite the miss, the rest of Eli Lilly's business performed strongly enough to reduce the overall revenue deficit to $500 million. The company maintains a strong financial position, with InvestingPro reporting an impressive 80.91% gross profit margin and a GOOD overall financial health score.
Looking ahead, Eli Lilly provided guidance for 2025, projecting total revenues between $58 and $61 billion. The midpoint of this range, $59.5 billion, is slightly above the Visalpha consensus of $58.2 billion. Wells Fargo's own model had forecasted $58.4 billion for 2025. The guidance reflects a positive growth outlook, with a potential increase of 32% from 2024 figures at the midpoint.
Based on InvestingPro's Fair Value analysis, the stock currently trades above its calculated Fair Value, though analysts maintain optimistic targets, reflecting confidence in the company's growth trajectory. InvestingPro subscribers have access to 14 additional valuable insights about Eli Lilly's financial health and growth prospects.
The key question for investors is whether they can rely on the company's guidance, especially after two consecutive quarters of missed earnings. Wells Fargo remains optimistic, expecting both access to and demand for Eli Lilly's products to grow in 2025, with label and geographical expansion. The company anticipates a 60% increase in sellable doses in the first half of 2025 compared to the first half of 2024.
Wells Fargo emphasized the importance of first-quarter prescription trends, which are expected to show an inflection due to direct-to-consumer marketing and expansion in label and access in the U.S. The firm suggests that Eli Lilly may now have set more accurate expectations after previous quarters' misguidance. To reach consensus expectations for 2025 tirzepatide sales, a low-teens quarter-over-quarter growth rate would be sufficient, noting that prescriptions grew approximately 21% in the fourth quarter compared to the third quarter.
In other recent news, pharmaceutical company Eli Lilly has seen significant developments. The company recently acquired Scorpion Therapeutics' PI3Kα inhibitor program in a deal that could total $2.5 billion. Despite preliminary Q4 revenue falling short of expectations, Eli Lilly projects a 32% revenue growth for 2024 and guides higher for 2025.
Analysts from BofA Securities and Citi maintain a Buy rating on Eli Lilly, with targets at $997 and $1,250 respectively. The company's oral GLP-1 treatment candidate, Orforglipron, is expected to launch in early 2026. In addition, Truist Securities reaffirmed their Buy rating on Eli Lilly, expressing confidence in the company's obesity drugs, Mounjaro and Zepbound.
However, TD Cowen raised concerns about the global pharmaceutical industry's future due to U.S. tariffs and geopolitical tensions but noted that large-cap pharmaceutical companies, including Eli Lilly, are well-positioned to mitigate these risks. These are the recent developments for Eli Lilly.
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