[ad_1]
Eli Lilly (LLY) commands one of the most expensive valuations among his large-cap pharmaceutical counterparts. He recently reached 17.9 times the $ 5.40 badysts expect him to win this year. In contrast, Merck (MRK) was 15 times and Pfizer (PFE) was 13 times. Lilly has beefed up its case for a higher valuation with an excellent earnings report in the second quarter on July 24, and the stock has appreciated more than 13% this month. But how long can the company support this hot race?
Probably not for long, but the company remains well positioned and has a good chance of increasing profits at a double-digit pace over the next few years. The Indianapolis-based company's portfolio includes drugs for immunology, cancer, cardiovascular disease, neuroscience (including depression) and diabetes.
It shows good margin growth, reflecting strong cost control, with an operating margin of 29% in the second quarter versus 18% in 2014. New drugs such as Trulicity, which treats diabetes, and Taltz (psoriasis in plates) are making their mark.
Another benefit of last publication of Lilly's results: The company plans to sell its animal health business, called Elanco. Damien Conover, a Morningstar badyst, estimates that the division could yield $ 12 billion to $ 13 billion. The proceeds from the initial public offering will be used to repay debt and repay capital to shareholders, said Mark Taylor, director of communications at Eli Lilly. The stock recently yielded 2.3%.
Conover argues that Lilly "will be one of the fastest growing pharmaceutical companies in the industry, with an annual revenue growth rate of 5% over the next three years." the fair value of the stock at $ 100; Like any major pharmaceutical company, Lilly faces pressure on patent expirations, including one for his Cialis erectile dysfunction drug. There is also a political climate that is hostile to the rise in drug prices. In May, Lilly CEO David Ricks said the company remains "focused on revenue growth by volume and not price" and that Alessandro Valentini, portfolio manager at Causeway Capital Management, believes Lilly could add up to $ 9 billion in sales to its new drugs and lose about $ 4 billion due to patent expiry, leaving the company in good shape. Causeway holds the Lilly stock. The drugs 'that they set up to get higher margins than current levels have helped the turnover,' says Valentini. Even with patent expiries, "you still have a pretty clear path for revenue growth in mid-digit numbers over the next two years," he adds.
Lilly earned $ 1.50 per share in the quarter. $ 1.11 a year earlier. The turnover reached $ 6.4 billion, a gain of 9% year-over-year.
The company has launched nine new products since 2014, including Trulicity, Verzenio (bad cancer) and Oluminant (rheumatoid arthritis). And one of the highlights of the last quarter was Trulicity. Its second-quarter sales figure reached nearly $ 780 million, up 62% over the previous year. Lilly also increased its adjusted earnings guidance for 2018 from $ 5.40 to $ 5.50 per share, from $ 5.10 to $ 5.20 before
. According to Morningstar's Conover, [traduction]
For investors, the key question is whether Lilly's top growth is embedded in the stock. The price / earnings ratio of the stock, though expensive compared to the group, remains about 12% lower than its five-year average
The stock is expected to cool a bit, but it should continue its bullish trajectory with strong profits growth
The trader: the routing of social media can not stop the rise of the market
Follow @lawlcs
[ad_2]
Source link
