It’s a busy week for pharmaceutical companies, with Eli Lilly And Co (NYSE:LLY), Biogen Inc (NASDAQ:BIIB), and Amgen, Inc. (NASDAQ:AMGN) having released their earnings report today. For Eli Lilly stock, investors sought a definitive sign where the renowned firm was headed. Following a steep drop at the end of January, LLY has trended inside a frustrating consolidation pattern.

Frustration truly is the defining attribute here. Since early summer of 2015, Eli Lilly stock gyrated wildly between bullish and bearish phases, only to come out dead even. Obviously, such antics failed to impress shareholders, who literally watched their money go nowhere for nearly three years. In the meantime, the broader indices kept climbing higher.

At the same time, it’s unfair to unload entirely on LLY stock. Several of the company’s peers didn’t live up to expectations. Moreover, the Donald Trump administration hasn’t exactly been helpful. For instance, last year, the president threatened to sue “bad actors” within the pharmaceutical industry. You just never know what’s coming next.

Those are the broader challenges which any pharmaceutical must face. But for LLY, the most pressing issue is patent-exclusivity loss. In some countries, the drugs Cymbalta, Strattera, Effient, Axiron, Zyprexa and Evista are now subject to generic competition. Further, the company’s leading therapies Zyprexa, Alimta, and Cialis have suffered significant revenue declines.

Another headwind is that U.S. sales for Alimta — a drug that is used to treat certain types of lung cancer — has experienced longer-term declines. This is primarily due to aggressive immune-oncology competition, and which has overall negatively impacted Eli Lilly stock.

However, it’s not all bad news for LLY. Several new products demonstrated positive revenue trends, which could make up for declines in other drugs. But can the company convince shareholders not to jump ship prematurely?

Great Start to the Fiscal Year for Eli Lilly Stock

If the recently released first-quarter earnings report is anything to go by, optimistic investors may want to hold on. Heading into the report, analysts consensus called for an earnings per share target of $1.13 on an adjusted basis. Instead, LLY delivered $1.34, resulting in a nearly 19% earnings surprise.

Needless to say, this performance blew through the estimate range’s roof. The most pessimistic analysts called for a $1.08 EPS, while the bulls only anticipated $1.18 at best. For those concerned about patent-exclusivity losses and mounting competitive pressures, Q1 was a massive relief.

The revenue picture was just as encouraging. The forecast called for a range between $5.4 billion to $5.6 billion. Consensus was right in the middle at $5.5 billion. Actual top-line sales were $5.7 billion, up 3.6% against consensus. More importantly, today’s haul exceeded the year-ago quarter by nearly 9%.

Wall Street overall responded positively to the pharmaceutical’s upgraded guidance. According to CNBC, “Lilly raised its full-year forecast to between $5.10 and $5.20 earnings per share, up the between $4.81 and $4.91 it previously guided. It also hiked its revenue expectation to between $23.7 billion and $24.2 billion from $23.0 billion and $23.5 billion.”

One oddity to note is that shares were volatile in pre-market trading. LLY stock initially dropped back approximately 3% until it suddenly sprang up to 4%. Heading into the open, shares settled into a range up between 1% and 2%.

This dynamic is characteristic of what we’ve seen with Eli Lilly stock. The bulls will certainly take heart with the encouraging results. However, the opposite side might deem Q1 as good, but not good enough.

Promising Results, But Significant Challenges Remain

Throughout this year, it will be interesting to see how Eli Lilly’s new drug pipeline pans out. One of the most promising is Trulicity, which has experienced dramatic growth. In 2015, Trulicity’s sales totaled less than $250 million. Last year, it brought in more than $2 billion.

Another recently launched drug to monitor is Cyramza. According to Zacks.com, strong demand from outside the U.S. should boost sales for the rest of 2018 and beyond. So far, the trend is encouraging. In 2016, Cyramza revenue totaled $614 million. The following year, sales increased 23.5% to $758 million.

Since 2016, Eli Lilly’s new products Trulicity, Taltz, Basaglar, Cyramza, and Jardiance have brought in $6.2 billion in sales. Although an impressive figure, you also have to consider that the company’s declining flagships are still putting up a fight.

In particular, Zyprexa, Alimta, Cialis, Strattera and Effient account for more than $12.8 billion over the same timeframe. Thus, it’s no guarantee that the new players will replace the old ones. It’s this overhang that has troubled Eli Lilly stock in recent years.

Unfortunately, I still have some questions for the company, and I’m not the only one. LLY stock is still about 7% to 8% short of regaining its losses from earlier this year. If it does recover, management then has to prove it can repeat its earlier successes.

The new drugs are promising. However, I need to see some more positive data before I take a shot.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.