Three More Earnings Reports

The most-hated rally in history continues to rally, and our Buy List is now up over 10% for the year. The S&P 500 finally broke through 1,185 this morning after failing two times before.

First, though, let’s get to three more earnings reports this morning. They all sound the same—beating forecasts and raising guidance.

Eli Lilly (LLY) reported earnings of $1.21 per share which is six cents more than Wall Street’s consensus. That’s a good showing, but the weak spot is that revenues rose only 1.7% to $5.65 billion, $120 million short of Wall Street’s estimates. As a result, the stock has pulled back modestly this morning.

Bloomberg writes:

Top-selling Zyprexa fell 0.8 percent to $1.21 billion, while the antidepressant Cymbalta gained 4.4 percent to $825.3 million and the cancer treatment Alimta rose 21 percent to $560.3 million. Higher demand outside the U.S. drove revenue growth, Lilly said.

Watch for Lilly to make some acquisitions soon. They need new drugs in the pipeline. The good news is that Lilly raised its full-year EPS forecast to a range of $4.65 to $4.75. Two months ago, the company said to expect $4.50 to $4.65. The shares are currently down about 1%.

Baxter International (BAX) is up nearly 4% today thanks to a very good earnings report. For the third quarter, Baxter earned $1.01 per share which is four cents more than Wall Street’s forecast. The company also said to expect full-year earnings of $3.96 to $3.98 per share. (Wow—that’s a narrow range, but there’s only one quarter to go.) The earlier range was $3.93 to $3.98. For Q4, Baxter sees earnings of $1.09 to $1.11 per share.

Sales of $3.22 billion, up 2.5%, topped Wall Street’s $3.16 billion forecast. Baxter noted that international sales growth was nicked by unfavorable foreign currency rates.

Sales in the bioscience business were flat at $1.39 billion, or up 3% excluding the currency impact, but Baxter noted better performance there. Contributing factors included hemophilia treatments and strong demand for a plasma-based treatment for immune disorders and another that treats an inherited condition that can hurt the lungs.

Sales in medication delivery, which includes items like intravenous solutions and drug infusion pumps. rose 5% to $1.23 billion, with growth reduced by the currency impact. Sales in the renal unit, which includes products for managing patients with end-stage kidney failure, grew 3% to $594 million.

Reynolds American (RAI) earned $1.35 per share, one penny more than estimates. The company also raised the low end of its full-year forecast. Reynolds now expects full-year EPS to range between $4.95 and $5.05. The earlier range was $4.90 to $5.05.

The number of cigarettes the company sold fell 2.6 percent to 20.1 billion sticks, but its market share rose slightly to 28.2 percent with increases in the market shares of both Camel and Pall Mall. Camel volumes grew 1.5 percent, and Pall Mall grew 45.1 percent in the quarter.

Although the company has been selling fewer cigarettes, they’ve been able to raise the price. The AP writes:

Reynolds American has aggressively promoted Pall Mall as a longer-lasting and more affordable cigarette as smokers weather the weak economy and high unemployment. During the quarter, the brand’s market share increased 2.8 points to 7.8 percent of the U.S. market.

“Pall Mall is the right product at the right time,” Daniel M. Delen, the head of R.J. Reynolds Tobacco Co., said in a news release.

Reynolds American and other tobacco companies are also focusing on cigarette alternatives — such as snuff and chewing tobacco — for future sales growth as tax increases, smoking bans, health concerns and social stigma make the cigarette business tougher.

Reynolds American said third-quarter volumes of its Kodiak and Grizzly smokeless tobacco grew only 1.2 percent due to higher levels of promotion from its competitors.

Shares of RAI are currently down about 1%.

Posted by on October 21st, 2010 at 10:37 am


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