On Wednesday morning, Eli Lilly (LLY) announced its FY2015 guidance and updated its earnings expectations for FY2014. Here’s what the news means for mutual fund investors.
Inside the News
FY2014
The company now expects to see earnings between $2.15 and $2.23 per share. Previously, the company expected to see EPS between $2.36 to $2.44.
FY2015
LLY expects to see EPS between $2.40 and $2.50 and non-GAAP EPS between $3.10 and $3.20. The company expects to see revenue between $20.3 billion and $20.8 billion. On average, analysts expect to see earnings of $3.21 per share and $20.88 billion in revenue.
Highly Priced Pharma Play
The guidance for FY2015 falls below analysts’ expectations, which is concerning for the highly priced stock. LLY is currently trading at 23x 2015 earnings estimates, which is very expensive for a drug company. The company’s dividend yield is around 2.8%, which may be ideal for income-focused investors. However, even with its dividend, this stock is still overvalued.
Mutual Funds to Watch
Investors seeking exposure to LLY may also be interested in the funds listed below. These funds currently hold the largest stakes in the company.
| Symbol | Mutual Fund | Stake |
|---|---|---|
| VPMCX | Vanguard PRIMECAP | 2.61% |
| VGHCX | Vanguard Healthcare | 1.97% |
| VTSMX | Vanguard Total Stock Market Index | 1.51% |
The Bottom Line
The funds above may be ideal for investors seeking exposure to LLY, but would prefer not to purchase the stock. Investors interested in LLY may also be interested in Bristol Myers Squib (BMY) and Merck (MRK).