Earnings results often indicate what direction a company will take in the months ahead. With Q4 behind us, let’s have a look at Eli Lilly (NYSE:LLY) and its peers.
The branded pharmaceutical industry relies on a high-cost, high-reward business model, driven by substantial investments in research and development to create innovative, patent-protected drugs. Successful products can generate significant revenue streams over their patent life, and the larger a roster of drugs, the stronger a moat a company enjoys. However, the business model is inherently risky, with high failure rates during clinical trials, lengthy regulatory approval processes, and intense competition from generic and biosimilar manufacturers once patents expire. These challenges, combined with scrutiny over drug pricing, create a complex operating environment. Looking ahead, the industry is positioned for tailwinds from advancements in precision medicine, increasing adoption of AI to enhance drug development efficiency, and growing global demand for treatments addressing chronic and rare diseases. However, headwinds include heightened regulatory scrutiny, pricing pressures from governments and insurers, and the looming patent cliffs for key blockbuster drugs. Patent cliffs bring about competition from generics, forcing branded pharmaceutical companies back to the drawing board to find the next big thing.
The 11 branded pharmaceuticals stocks we track reported a mixed Q4. As a group, revenues beat analysts’ consensus estimates by 1.3%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.7% since the latest earnings results.
Eli Lilly (NYSE:LLY)
Founded in 1876 by a Civil War veteran and pharmacist who was frustrated with the poor quality of medicines available at the time, Eli Lilly (NYSE:LLY) discovers, develops, and manufactures pharmaceutical products for conditions including diabetes, obesity, cancer, immunological disorders, and neurological diseases.
Eli Lilly reported revenues of $13.53 billion, up 44.7% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with a solid beat of analysts’ full-year EPS guidance estimates and full-year revenue guidance slightly topping analysts’ expectations.
"2024 was a highly successful year for Lilly," said David A. Ricks, Lilly's chair and CEO.
Eli Lilly achieved the fastest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 11.8% since reporting and currently trades at $743.98.
Best Q4: Supernus Pharmaceuticals (NASDAQ:SUPN)
With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ:SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson's disease, and migraine.
Supernus Pharmaceuticals reported revenues of $174.2 million, up 6% year on year, outperforming analysts’ expectations by 12.2%. The business had a very strong quarter with an impressive beat of analysts’ EPS estimates and full-year operating income guidance topping analysts’ expectations.
Supernus Pharmaceuticals delivered the biggest analyst estimates beat among its peers. The stock is down 4.2% since reporting. It currently trades at $31.44.
Is now the time to buy Supernus Pharmaceuticals? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: Zoetis (NYSE:ZTS)
Originally spun off from Pfizer in 2013 as the world's largest pure-play animal health company, Zoetis (NYSE:ZTS) discovers, develops, and sells medicines, vaccines, diagnostic products, and services for pets and livestock animals worldwide.
Zoetis reported revenues of $2.32 billion, up 4.7% year on year, in line with analysts’ expectations. It was a softer quarter as it posted a significant miss of analysts’ full-year EPS guidance estimates.
As expected, the stock is down 12.3% since the results and currently trades at $152.48.
Read our full analysis of Zoetis’s results here.
Corcept (NASDAQ:CORT)
Focusing on the powerful stress hormone that affects everything from metabolism to immune function, Corcept Therapeutics (NASDAQ:CORT) develops and markets medications that modulate cortisol to treat endocrine disorders, cancer, and neurological diseases.
Corcept reported revenues of $181.9 million, up 34.3% year on year. This print lagged analysts' expectations by 8.5%. It was a slower quarter as it also produced a significant miss of analysts’ EPS estimates.
Corcept achieved the highest full-year guidance raise but had the weakest performance against analyst estimates among its peers. The stock is up 13.8% since reporting and currently trades at $72.19.
Read our full, actionable report on Corcept here, it’s free.
Bristol-Myers Squibb (NYSE:BMY)
With roots dating back to 1887 and a transformative merger in 1989 that gave the company its current name, Bristol-Myers Squibb (NYSE:BMY) discovers, develops, and markets prescription medications for serious diseases including cancer, blood disorders, immunological conditions, and cardiovascular diseases.
Bristol-Myers Squibb reported revenues of $12.34 billion, up 7.5% year on year. This result surpassed analysts’ expectations by 6.6%. Zooming out, it was a mixed quarter as it also recorded an impressive beat of analysts’ EPS estimates but a significant miss of analysts’ full-year EPS guidance estimates.
The stock is down 10% since reporting and currently trades at $53.73.
Read our full, actionable report on Bristol-Myers Squibb here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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