Will Eli Lilly (LLY) Keep Its Earnings Streak Alive? - Analyst Blog


Eli Lilly and Company ( LLY ) is scheduled to report first quarter 2014 results before the opening bell on Apr 24.

Last quarter, Eli Lilly had posted an earnings surprise of +1.37%. We expect the company to beat expectations in the first quarter as well.

Why a Likely Positive Surprise?

Our proven model shows that Eli Lilly is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: The Earnings ESP (Expected Surprise Prediction), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +4.29%. This is a meaningful and leading indicator of a likely positive earnings surprise.

Zacks #3 Rank (Strong Buy): Note that stocks with Zacks Rank #1, #2 and #3 have a significantly higher chance of beating earnings estimates. We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

The combination of Eli Lilly's Zacks Rank #3 (Hold) and an earnings ESP of +4.29% make us confident of an earnings beat on Apr 24.

What is Driving Better-than-Expected Earnings?

Eli Lilly has delivered positive earnings surprises in the last four quarters with an average beat of 7.35%.

Products like Humulin, Alimta, Cialis, Trajenta and Strattera should perform well and help offset the negative impact of the loss of U.S. exclusivity for Evista and Cymbalta. The animal health division, Elanco, should drive revenues as well.

Cost control and share repurchases should also boost the bottom line.

Other Stocks to Consider

Eli Lilly is not the only company looking up this earnings season. We also see likely earnings beats coming from these companies in the medical sector:

Actavis plc ( ACT ) has an Earnings ESP of +3.34% and holds a Zacks Rank #2 (Buy). Actavis will report first quarter earnings on Apr 30.

Teva Pharmaceutical Industries Ltd. ( TEVA ) has an Earnings ESP of +0.81% and holds a Zacks Rank #1 (Strong Buy). Teva will report first quarter earnings on May 1.

Forest Laboratories Inc. ( FRX ) has an Earnings ESP of +4.55% and holds a Zacks Rank #3. Forest Labs will report first quarter earnings on Apr 29.

ACTAVIS PLC (ACT): Free Stock Analysis Report

FOREST LABS A (FRX): Free Stock Analysis Report

LILLY ELI & CO (LLY): Free Stock Analysis Report

TEVA PHARM ADR (TEVA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ACT , FRX , LLY , TEVA



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