Eli Lilly shares pop as weight-loss drug demand fuels guidance hike

Investing.com -- Eli Lilly shares jumped more than 5% in premarket trading Wednesday after the U.S. pharma giant raised its annual revenue guidance amid strong demand for its popular weight-loss and diabetes drugs.

The company lifted its full-year 2026 revenue guidance to $85 billion to $87 billion, up from a prior range of $82 billion to $85 billion, ahead of the $85.4 billion consensus.

It also raised underlying adjusted EPS guidance by $2.78 at the midpoint, though that was more than offset by $3.03 in acquired IPR&D charges from second-quarter business development activity, resulting in an updated EPS range of $35.50 to $36.50.

Lilly also raised its performance margin guidance to 49.0% to 50.5%, up from 47.0% to 48.5%.

For the second quarter, Eli Lilly reported earnings per share of $8.38, missing the analyst estimate of $8.84. Revenue rose 48% year-over-year to $22.97 billion, well ahead of the $20.56 billion consensus estimate, driven primarily by Mounjaro and Zepbound volume.

Key Products revenue grew to $15.7 billion, led by Mounjaro and Zepbound, with revenue from the Immunology, Oncology and Neuroscience therapeutic areas up 121% year-over-year. Mounjaro revenue jumped 91% to $9.94 billion, while Zepbound rose 56% to $4.93 billion.

Adjusted gross margin rose 50% to $19.8 billion, with gross margin as a percentage of revenue climbing 1.3 percentage points to 86.3%, driven by improved production costs and a favorable product mix, partly offset by lower realized prices.

"Lilly’s momentum continues, as we delivered 48% revenue growth and raised our full-year guidance," said David Ricks, CEO of Eli Lilly. "At the same time, Lilly is building for the future. With our next-generation weight-loss medicine retatrutide and its complete clinical data package in hand, new manufacturing capacity coming online, and exciting new assets entering our pipeline through business development, Lilly’s future, after 150 years, has never been brighter."

The company said it recorded $2.8 billion in acquired in-process research and development charges during the quarter, up sharply from $154 million a year earlier, primarily tied to its acquisitions of Orna Therapeutics and Ajax Therapeutics.

Research and development expenses rose 14% to $3.8 billion, or 17% of revenue, reflecting continued investment in Lilly’s early- and late-stage pipeline. Marketing, selling and administrative expenses increased 25% to $3.4 billion, driven by promotional spending supporting ongoing and planned drug launches.

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