Investing.com -- Eli Lilly (NYSE:LLY) shares plunged around 14% in early trading on Wednesday after it reported third-quarter earnings that fell short of analyst expectations.
The pharmaceutical giant posted adjusted earnings per share of $1.18, missing the consensus estimate of $1.45. Revenue came in at $11.44 billion, below analyst projections of $12.09 billion.
Despite falling short of expectations, revenue grew 20% YoY, boosted by strong sales of diabetes drug Mounjaro and weight loss treatment Zepbound. Excluding those products, non-incretin revenue increased 17%.
The company lowered its full-year 2024 revenue guidance to between $45.4 billion and $46 billion, down from its previous forecast of $45.4 billion to $46.6 billion and below the $46.25 billion analysts were expecting.
Eli Lilly also cut its 2024 adjusted EPS outlook to between $13.02 and $13.52, compared to the $13.50 consensus estimate. The previous EPS forecast was from $16.10 to $16.60.
"Lilly had another strong growth quarter in Q3, with total revenue increasing by 42% after excluding divestiture activity in the same period last year," said CEO David Ricks. "While the growth of Mounjaro and Zepbound is impressive, we are equally proud of the 17% growth in non-incretin revenue."
Prior to the premarket decline on Wednesday, Eli Lilly shares had gained over 55% for the year-to-date.
Reacting to the results, analysts at Morgan Stanley noted the Mounjaro/Zepbound miss and the lowered top end of the revenue guidance range. "Inventory dynamics from last quarter were cited as having a negative MSD impact on US sales of Mounjaro/Zepbound," said the bank. "We expect shares to be weak as a result, and look for color on supply/demand dynamics on the call."
Deutsche Bank said in a note that "the optics of LLY lowering the top-end of its FY24 guide are not great and will likely question the 4Q24 step up." However, the bank added that it believes the demand backdrop is still healthy, making the analysts "wonder if Tirzep manufacturing is just not stepping up as much as LLY anticipated."
Barclays stated: "Challenging the near-term setup and any immediate bounce-back from today’s pressure on the stock is the forthcoming swath of competitor updates over the balance of ‘24 (ObesityWeek, CagriSema, MariTide)."
Following the stock's reaction to the results, BMO Capital said that they'd be buyers "particularly on weakness, as the longer-term thesis appears intact," adding that "commentary on the call remains critical, as investors will need reassurance on the nuances of the metabolic franchise."