Eli Lilly and Company
(
LLY
) recently updated its reported (GAAP) guidance for 2012 following
the early payment of financial obligations from Amylin
Pharmaceuticals. Eli Lilly raised its reported guidance to reflect
the additional income received from Amylin.
Amylin, which was recently acquired by
Bristol-Myers Squibb
(
BMY
), has made a payment of $1.259 billion related to its revenue
sharing obligation for exenatide. As a reminder, Amylin and Eli
Lilly had terminated their long-standing partnership for the
worldwide development and commercialization of exenatide in
November 2011.
As a result of the early payment from Amylin, Eli Lilly raised
its 2012 reported earnings guidance to $3.72 - $3.82 per share from
$3.29 - $3.39 per share. Eli Lilly expects third quarter reported
results to be boosted by about 43 cents due to the recognition of
the additional income.
The company also expects to recognize income of 25 cents per
share in 2013 related to the transfer of exenatide commercial
rights outside the US to Amylin. Amylin has also repaid a $165
million loan plus interest.
Eli Lilly, meanwhile, maintained its adjusted earnings outlook
of $3.30 - $3.40 per share on revenues of $21.8 - $22.8 billion.
The Zacks Consensus Estimate currently stands at $3.38 per
share.
While the loss of Zyprexa exclusivity is expected to impact
revenues by more than $3 billion, products like Cymbalta, Cialis,
Humalog, Alimta and Forteo are expected to continue performing
well. Moreover, new products like Effient, Axiron and Tradjenta
should also contribute to revenues.
The Animal Health business should also continue performing well.
Meanwhile, revenue growth in Japan and emerging markets will be
impacted by pricing actions in Japan and the loss of patent
protection for Zyprexa and other products in some emerging
markets.
Eli Lilly is working on controlling costs, and expects operating
expenses to remain flat in 2012. While marketing, selling and
administrative expenses are expected to decline to $7.3 billion -
$7.7 billion, research and development expenses are expected to
remain flat or increase to $5.0 billion - $5.3 billion.
Eli Lilly remains on track to meet or exceed its mid-term
guidance. From now through 2014, the company expects annual net
income of at least $3 billion on revenues of at least $20 billion.
Operating cash flow is expected to be at least $4 billion every
year during this time period. Post 2014, Eli Lilly expects to
return to top and bottom-line growth.
We currently have a Neutral recommendation on Eli Lilly. The
company carries a Zacks #2 Rank (short-term Buy rating).
BRISTOL-MYERS (BMY): Free Stock Analysis Report
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