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Eli Lilly on Thursday reminded investors that the best growth story in large-cap pharmaceuticals has hardly grown stale, sending shares to their highest levels since October. Revenue in the three months ended Dec. 31 rose 45% year over year to $13.53 billion, in line with Wall Street expectations, according to LSEG. Lilly’s disappointing preannouncement in January enabled analysts to tweak their estimates to effectively match the reported figure. Adjusted earnings per share (EPS) of $5.32 came in solidly ahead of the $4.95 consensus, LSEG data showed. Lilly had not offered preliminary profit figures. Type-2 diabetes treatment Mounjaro and obesity drug Zepbound combined for $5.44 billion in fourth-quarter revenues, missing the revised FactSet consensus of $5.63 billion. Analysts had been lowering estimates since Lilly’s preannouncement, which included weaker-than-expected Mounjaro and Zepbound sales, but clearly the consensus didn’t fully catch up. Eli Lilly Why we own it: Eli Lilly’s best-in-class drugs should enable growth above the industry average for many years to come. The portfolio is anchored by its GLP-1 franchise, which currently consists of Mounjaro for type-2 diabetes and Zepbound for obesity. The fast-growing class of drugs has the potential to treat other conditions, such as sleep apnea and reduce the risk of stroke. Lilly’s pipeline of Alzheimer’s treatments, including the recently approved Kisunla, add to the stock’s long-term appeal. Competitors: Novo Nordisk , Biogen , Eisai, Merck and Pfizer Weight in portfolio: 2.72% Most recent buy: Nov. 25, 2024 Initiated: Oct. 8, 2021 Bottom line Eli Lilly has its stride back after a bruising three-month stretch for the stock that began with its messy third-quarter earnings report. Along the way, Lilly endured some political hurdles — namely, the nomination of obesity drug critic Robert F. Kennedy Jr. to be the nation’s top health official — and some weak prescription trends for Zepbound and Mounjaro, its two most important drugs. Sure, Lilly scored some big wins over obesity competitors late last year, but it was not enough to reignite the once red-hot stock. Then came Lilly’s negative fourth-quarter preannouncement on Jan. 14, which punctuated this rough patch for the stock. A few days later, on Jan. 17, it closed at $725.72 — its lowest settle in almost a year. That’s when the buyers started to return to a beaten-up Lilly, sending shares higher in eight of the past 10 sessions through Wednesday. Their faith in the company and its stock was validated by Thursday’s earnings report, guidance and conference call. So was ours. LLY 1Y mountain Eli Lilly 1-year performance “I would not sell this stock,” Jim Cramer said Thursday, standing by his long-held bullishness on Lilly. Indeed, as Lilly shares sold off on the preannouncement in January, Jim was clear in what to do: “Let the uniformed people sell.” He also said, “I think you have to be on the horse that is Eli Lilly.” It’s not perfect, as the past few months showed, but it’s still a thoroughbred. One of the most important new data points Lilly shared Thursday was its adjusted EPS outlook for 2025, which at $22.50 to $24 is better than the $22.69 analysts had expected. Its 2025 revenue guidance of $58 billion to $61 billion was first disclosed last month and reiterated Thursday. Lilly also sees its adjusted gross margin minus operating expenses in the range of 41.5% to 43.5%. That is consistent with where executives have signaled it should be as the company reinvests in the business to fuel long-term growth while maintaining a level of profitability that pleases investors. Investing in its drug pipeline the way that Eli Lilly does it not cheap, but it can be lucrative if those bets pay off. While investors want to see Mounjaro and Zepbound continue picking up steam in 2025, Lilly’s pipeline will be a big focus as well. The most important product to know here is orforglipron, its oral obesity drug that Wall Street and the company alike believes is critical to helping the weight loss market reach its full commercial potential. Zepbound and rival Wegovy, made by Novo Nordisk, are once-weekly injectables. On Thursday’s call, executives said Eli Lilly expects late-stage trial data for orforglipron in both obesity and diabetes to be released this year, in the third and second quarters, respectively. The company hopes to submit orforglipron’s obesity data to U.S. regulators later this year. Another drug in the pipeline to watch is retatrutide, an injectable obesity drug that early studies have suggested is more effective than Zepbound. Lilly expects late-stage results on retatrutide in patients with obesity and osteoarthritis of the knee later this year. The trial readouts represent additional catalysts for Lilly’s stock, beyond the current revenue growth potential of Mounjaro and Zepbound, and reinforce our desire to stay invested in the company. (Jim Cramer’s Charitable Trust is long LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The Eli Lilly headquarters in Indianapolis, Indiana, on Aug. 15, 2024.
AJ Mast | Bloomberg | Getty Images
Eli Lilly on Thursday reminded investors that the best growth story in large-cap pharmaceuticals has hardly grown stale, sending shares to their highest levels since October.
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