Photo by National Cancer Institute on Unsplash

Eli Lilly (LLY) shares rallied 4.9% in the last trading session to close at $310.87. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 7% loss over the past four weeks.

Share prices likely rose after the analysts at UBS upgraded the stock’s recommendation to “Buy”. The analysts expect Eli Lilly’s recently approved drug Mounjaro (tirzepatide) has a blockbuster potential. This May, the drug was approved by the FDA for treating type II diabetes. The drug is also being evaluated as a potential treatment for obesity. Earlier this April, Eli Lilly announced data from a late-stage study which showed that treatment with the drug achieved at least 20% body weight reductions in more than half of the study participants.

This drugmaker is expected to post quarterly earnings of $1.94 per share in its upcoming report, which represents no change from the year-ago quarter. Revenues are expected to be $7.02 billion, up 3.7% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Lilly, the consensus EPS estimate for the quarter has been revised 0.6% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on LLY going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Lilly is a member of the Zacks Large Cap Pharmaceuticals industry. One other stock in the same industry, Novartis (NVS) , finished the last trading session 0.5% lower at $77.14. NVS has returned -7.3% over the past month.

Novartis' consensus EPS estimate for the upcoming report has remained unchanged over the past month at $1.57. Compared to the company's year-ago EPS, this represents a change of -8.2%. Novartis currently boasts a Zacks Rank of #3 (Hold).

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