Eli Lilly (LLY) is paving the way to a strong 2021

Shares of Eli Lilly & Co. (NYSE: LLY) were up over 2% on Wednesday. The stock has gained over 30% since the beginning of this year and over 22% in the past one month. Eli Lilly appears to be on track for a strong year in 2021 based on the outlook provided by the company a day ago as well as its recent announcements.

Strong outlook

Eli Lilly updated its guidance for 2020 and now expects revenues of $24.2-24.7 billion versus the prior outlook of $23.7-24.2 billion. The updated guidance reflects higher sales of the company’s COVID-19 medicine bamlanivimab due to an additional purchase agreement with the US government. GAAP EPS is now expected to be $6.28-6.48 versus $6.20-6.40 while adjusted EPS is expected to be $7.45-7.65 versus $7.20-7.40.

For FY2021, Eli Lilly expects revenues to range between $26.5-28 billion, including revenues of $1-2 billion from COVID-19 therapies. The revenue growth is expected to be driven by key products such as Trulicity, Taltz, Verzenio, Jardiance, Olumiant, Cyramza, Emgality, Tyvyt, and Retevmo, and also by COVID-19 therapies.

Revenues are expected to be negatively impacted by lower revenues for products that have lost patent exclusivity. In 2021, prices are expected to decline in the mid-single digits globally. In the US, prices are expected to decrease in the low to mid-single digits due to higher rebates while outside the US, the company expects prices to decline in regions like China, Japan and Europe.

GAAP EPS is expected to be $7.25-7.90 while adjusted EPS is expected to be $7.75-8.40 in fiscal year 2021.

Acquisitions

On Tuesday, Eli Lilly announced that it was acquiring Prevail Therapeutics Inc. (NASDAQ: PRVL) for $880 million. Prevail develops gene therapies for neurodegenerative diseases. This acquisition is expected to help Eli Lilly move into gene therapy with Prevail’s portfolio of assets and is expected to close in the first quarter of 2021.

Prevail’s pipeline includes gene therapies for Parkinson’s disease, Gaucher disease, dementia, amyotrophic lateral sclerosis (ALS), and other neurodegenerative disorders.

Dividend increase

On Monday, Eli Lilly announced a 15% increase in its quarterly dividend to $0.85 per share, or $3.40 on an annualized basis. The dividend is payable on March 10, 2021 to shareholders of record as of February 12.

Pipeline

Eli Lilly is broadening its product offerings in oncology. Earlier this month the company reported positive data from its trials for Verzenio in the treatment of breast cancer and its BTK inhibitor LOXO-305 for the treatment of chronic lymphocytic leukemia (CLL) and small lymphocytic lymphoma (SLL). The company’s COVID-19 therapies are also expected to drive growth in the coming year.

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