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Shares of the drugmaker Eli Lilly jumped 1.1% in premarket trading on Tuesday as the company announced 2020 financial guidance that is higher than current Wall Street estimates. The guidance comes a day after the company increased its quarterly dividend by 15% and helps extend a breakout that began in November.

Eli Lilly (ticker: LLY) projected that its operating margin would be 31% on a non-GAAP basis next year. This is better than what investors we spoke with were expecting and represents a step-up from the 28.6% operating margin in 3Q19, wrote Cantor Fitzgerald analyst Louise Chen in a note out Tuesday.

Lilly said it expected revenue in 2020 of between $23.6 billion and $24.1 billion. As of Tuesday morning, the Wall Street consensus estimate was $21.1 billion, according to FactSet.

The company said it expected non-GAAP earnings per share of between $6.70 and $6.80 in 2020, higher than the Wall Street consensus estimate of $5.95, according to FactSet.

We expect 2020 to be a year of strong operating and financial performance for Lilly, characterized by revenue growth for our key medicines both in the U.S. and in international markets, ongoing productivity initiatives leading to further margin expansion, continued progress in our clinical pipeline of new medicines, and solid cash flow, said Josh Smiley, the companys chief financial officer, in a statement.

The back story. Shares of Lilly are up 6.2% so far this year. The stock is trailing the S&P 500, which is up 27.3% this year, the S&P 500 Health Care sector index, up 17.5% this year, and the S&P 500 Pharmaceuticals industry group, up 9.5% this year.

Whats new. In its announcement Tuesday, Lilly said that it expected its 2020 revenue growth to be driven by sales of products including the diabetes drug Trulicity, the psoriasis drug Taltz, the migraine drug Emgality, and Reyvow, another migraine drug recently approved by the Food and Drug Administration.

Lilly said that if it meets the revenue forecast, it will hit the 7% revenue compound annual growth rate it had previously projected for the 2015-2020 time frame.

The company also increased its dividend on Monday, announcing that the first quarter dividend in 2020 will be 74 cents per share, up from 64.5 cents per share.

Lilly is in the early phase of an exciting period of prolonged growth for the company, driven by an expanding portfolio of new medicines focused on diabetes, oncology, immunology, and neuroscience, said the companys chairman and CEO, David Ricks,

Looking forward. The company will discuss the new financial guidance on a conference call set to begin at 9 a.m.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

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Eli Lilly Stock Rises as Earnings Guidance Beats Analyst Expectations - Barron's