Market Commentary: The Meteoric Rise of Eli Lilly

Did you know that Eli Lilly and other pharmaceutical companies have sold approximately 10.6 million shots of obesity drug doses in the U.S. in a single month? The rise of these injectable weight loss medications is so powerful that it’s causing investors to question the future of even staple food and beverage stocks.

While this aspect alone could secure Eli Lilly as the pharmaceutical golden goose you’ve been looking for there is much more than meets the eye.

Key Points

• Eli Lilly’s Q2 earnings outpaced expectations and the performance was boosted by diverse revenue streams, including strong sales of a cancer drug and a diabetes medication.
• The company’s success in the weight loss drug market is affecting stock prices in other sectors. Investors have moved away from food and beverage stocks like PepsiCo, Coca-Cola, and Conagra Brands, which have underperformed the market over the past 6 months.
• Eli Lilly presents a compelling investment proposition with strong growth prospects, a diversified product portfolio, and a wider impact on other industries. The combination of these factors positions it as a stock that cannot be ignored.

Exceptional Earnings Growth Is No Fluke

In the second quarter, Eli Lilly saw its adjusted earnings skyrocket by almost 69% to $2.11 per share, crushing analysts’ expectations of $1.98 per share. The company generated over $8.3 billion in sales, far outpacing analysts’ estimates just shy of $7.6 billion.

A closer look at the data reveals a well-diversified portfolio of medications addressing multiple conditions. Sales of Verzenio, a cancer treatment drug, soared 57% to almost $1 billion while Jardiance, aimed at diabetes sufferers, saw impressive sales growth of 45%.

It’s clear that Eli Lilly is much more than a one trick pony, making it a relatively lower-risk investment compared to pharmaceutical firms that hinge their fortunes on a single blockbuster drug.

Beyond Diabetes & Cancer

The outlook for Eli Lilly is very promising. By 2028, sales of Mounjaro alone could potentially hit $22 billion. Add to that the Alzheimer’s drug, donanemab, which is anticipated to bring in $1.2 billion by 2025, and you have a broad future growth strategy. Plus, LLY is working on migraine medication Emgality, which is expected to see a consistent rise in annual sales through 2028.

The company’s contributions to the GLP-1 weight loss drug market have resulted in an unforeseen but significant impact on the stock prices of leading food and beverage companies.

In fact, the investor frenzy has caused stocks like PepsiCo, Coca-Cola, and Conagra Brands to vastly underperform the market over the past 6 months. Lilly on the other hand has had a raucous time, rising by 65% year to date.

Is Eli Lilly the Investment of the Decade?

From soaring quarterly earnings fueled by multiple blockbuster drugs to an unforeseen impact on the food and beverage industry, Eli Lilly is a multifaceted giant that appears to be well-poised for sustainable growth.

What makes it an even more intriguing prospect is its well-diversified portfolio of medications that promise consistent growth, effectively mitigating the risk associated with over-reliance on a single revenue stream.

While pharma is famously uncertain, the combination of impressive earnings growth, a diversified drug portfolio, robust future outlook, and an unanticipated but significant impact on other industries makes Eli Lilly a stock that demands attention.

Investors need to look no further than the numbers. From the millions of obesity drug doses in a single month to the company’s wide-reaching influence on the food and beverage sector, Eli Lilly appears to have all the hallmarks of a stock that deserves a feature spot on a short watchlist.