July and August were busy months, with numerous US companies announcing their latest results.
Amid this flurry of earnings reports, you may have overlooked some noteworthy performances.
We will highlight some of the blue-chip companies that have demonstrated strong earnings growth and have provided promising guidance.
Eli Lilly (NYSE: LLY)
The world’s largest healthcare company has delivered once again.
For the second quarter of 2024 (2Q 2024), Eli Lilly demonstrated why it remains a clear leader in the healthcare industry.
Eli Lilly announced a revenue increase of 36.0% year on year, climbing from US$8.3 billion to US$11.3 billion.
Even more impressively, net profit surged 68.3% year on year, reaching US$3.0 billion.
The company attributed its robust revenue growth to higher sales volumes, driven by the success of its diabetes and cancer drugs.
Most notably, Eli Lilly has seen blockbuster demand for its drug, Mounjaro, which is known for enabling “cosmetic weight loss”, despite the company’s attempt to discourage such uses.
In 2Q 2024, sales for Mounjaro tripled year on year, surging from US$979.7 million to US$3.1 billion.
This performance has reassured investors, who were worried that a similar drug, Ozempic, marketed by rival Novo Nordisk (NYSE: NVO), could threaten Eli Lilly’s market share.
Apart from higher sales volume, Eli Lilly also reported better gross margins, an improvement of 2.5 percentage points to 80.8% due to favourable pricing strategies.
Looking ahead, Eli Lilly will continue its significant investments in innovation, with 15% of revenue in 2Q spent on research and development.
The company has also completed its recent acquisition of Morphic, a biopharmaceutical company specialising in oral therapy for chronic diseases, to expand Lilly’s immunology pipeline in organ therapies.
Following such a promising quarter, Eli Lilly has raised its full-year guidance by an additional US$3 billion.
A quarterly dividend of US$1.30 will be paid on 10 September 2024, taking the annualised dividend to US$5.20 per share.
Mastercard Inc (NYSE: MA)
Global payment company Mastercard also released its 2Q 2024 earnings.
The company posted a revenue of US$7.0 billion, marking an uptick of 11.1% year on year.
Net profit came in at US$3.3 billion, up 17.9% year on year.
The improvement in Mastercard’s top-line was attributed to growth in payment networks and value-added services and solutions.
Gross dollar volume rose by 9.0% year on year, with Mastercard handling US$2.4 trillion worth of transactions during the quarter.
Revenue from Mastercard’s value-added service, which consists of a wide array of services and operations ranging from consulting, marketing, and data analytics, grew by 19.0% year on year.
When comparing Mastercard’s latest financial performance with that of its closest competitor, Visa (NYSE: V), the former enjoyed a stronger quarter.
While Mastercard’s gross volume increased by 9.0% year on year, Visa’s gross volume only rose by 7% year on year.
Mastercard’s cross-border volume growth of 17% also surpassed Visa’s 14%.
At the macroeconomic level, Mastercard anticipates that consumer spending will remain stable, buoyed by a solid labour force and wage growth.
Additionally, the company is committed to ramping up its operations in Africa, where cash remains the primary form of transaction, signalling a potential expansion opportunity.
Mastercard has partnered with several telecommunication and network operators to support Africa’s mobile money system.
Furthermore, Mastercard continues to forge partnerships with banks and fintech companies in the region to gain further market share.
While Mastercard did not provide specific financial guidance for 2024, management expects net revenue to grow at the high end of a low double-digit range on a currency-neutral basis.
Lastly, Mastercard recently issued a dividend payment of US$0.66 on 9 August 2024, up 15.8% year on year from the US$0.57 paid out in the prior year.
Advanced Micro Devices (NASDAQ: AMD)
These past few weeks have been challenging for the semiconductor industry.
To provide some context, over the past month, the PHLX Semiconductor Index (^SOX), a capitalisation-weighted index comprising 30 semiconductor companies plunged by 20.0%.
Despite this downturn, earnings from Advanced Micro Devices (AMD) suggest that the industry remains poised for growth.
For 2Q 2024, AMD reported a remarkable set of earnings.
Revenue rose by a modest 8.9% year on year, totalling US$5.8 billion.
Meanwhile, net income soared by an outstanding 881% year on year, from US$27 million to US$265 million.
This growth was largely supported by a noteworthy improvement in gross margins, which rose from 46% in 2Q 2023 to 49% in 2Q 2024.
Investors will be pleased to note that AMD’s data centre business drove revenue growth.
This division boasts better margins, which will lead to higher profitability for the company.
Over the past year, revenue from data centres has more than doubled, more than doubling from US$1.3 billion to US$2.8 billion.
Due to AMD’s expansion in the data centre business, the company is able to spread its fixed costs more efficiently, with operating margins in this segment improving by 15 percentage points year on year from 11% to 26%.
The semiconductor designer continues to secure major clients, with Microsoft (NASDAQ: MSFT) employing various AMD chips to power many of its artificial intelligence (AI) services such as CoPilot and GPT-4 Turbo.
Other notable customers that AMD recently secured include Adobe (NASDAQ: ADBE), Boeing (NYSE: BA), and Optiver.
Moving forward, AMD will release new processors powered by its breakthrough “Zen-5” technology, designed to power AI experiences.
The company has also revealed strong demand for their Zen-5 processors, with expectations of Zen-5 desktops and notebooks released in the next quarter.
With the ongoing momentum of AMD’s data centre business, the chip giant has raised the full-year data centre revenue forecast from the US$4 billion guided back in April, to US$4.5 billion.
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Disclosure: Aw Kai Rui does not own any of the stocks mentioned in this article.
