Eli Lilly shares are soaring after the corporate reported impressive second-quarter results, boosted by a mix of increased supply and higher pricing for its successful weight-loss drugs Mounjaro and Zepbound, suggesting the corporate could make inroads against Novo Nordisk. “Investors were nervous before entering, and this number will be a huge relief,” Wells Fargo analyst Mohit Bansal wrote in a post-earnings research note. Lilly shares are up greater than 7% on the news. The two brands, each of which contain tirzepatide, posted second-quarter sales of $4.33 billion, beating the consensus estimate of $3.35 billion. Following this major success, Lilly raised its 2024 sales forecast by $3 billion to a spread of $45.4 billion to $46.6 billion. Earnings per share estimates were raised to $16.10 to $16.60 from $13.50 to $14. Barclays analyst Carter Gould said the upper forecast “should allay doubts about the near-term trajectory and help defuse expectations for 2025 numbers.” Although Lilly is a big, diversified pharmaceutical company, the stock move was largely driven by sentiment around its GLP-1 drugs to treat diabetes and obesity. The drugs, which mimic incretin hormones, help patients shed weight by suppressing appetite and regulating blood sugar. Lilly shares experienced a pointy decline of nearly 16% within the month before the outcomes were released. Some of the pressure was because of the broader movement within the stock market, where investors sold mega-cap technology stocks and other strong performers. Lilly matches that pattern: Shares are up greater than 46% this yr, even after the recent sell-off. LLY YTD mountain Eli Lilly shares year-to-date. But mixed in with Lilly’s headwinds were two big concerns. The first followed positive reports from competitors that showed they were making progress in developing their very own weight-loss drugs. While a few of those therapies appear promising, Lilly can be hard at work by itself next-generation treatments and still has an enormous lead over the opposite players, in line with analysts. Another concern was pricing, exacerbated by weakness from Novo Nordisk in its second-quarter results released Wednesday. Novo’s diabetes treatment Ozempic and its weight-loss drug Wegovy were costlier in comparison with Lilly’s rival drugs. This could have caused the pricing pressure Novo has faced. In addition, there are patients and doctors who may prefer Zepbound for treating obesity and chubby patients because clinical trial results showed Lilly’s drug worked higher than Novo’s Wegovy. Wells Fargo’s Bansal said Mounjaro prescriptions rose 14% from the primary to the second quarter, while Zepbound’s rose 59%. However, Mounjaro sales rose 59% quarter-on-quarter and Zepbound’s rose 140% as Lilly was in a position to improve pricing. Lilly said access to Zepbound for obesity treatment is improving, with 86% of personal health plans covering the drug and over 50% of employers choosing it. That’s up from about 67% of personal plans as of April 1. “Lilly is pulling ahead in the metabolic duopoly,” BMO Capital Markets analyst Evan David Seigerman said in a research note. Meanwhile, analysts see several events on the horizon that would further boost Lilly’s shares in the approaching months. One key event can be a have a look at tirzepatide’s health outcomes data. That trial is designed to indicate that the drug offers patients advantages beyond weight reduction. If successful, it could open the door to expanded use of Zepbound, including for patients covered by Medicare and Medicaid. Lilly has already submitted data to the Food and Drug Administration showing that tirzepatide might help treat obstructive sleep apnea in obese adults. Expanding product labeling could also result in increased use of the drug, analysts say. Also closely watched are Phase 3 results of orforglipron, an oral GLP-1 drug, expected to seem next yr. As JPMorgan analyst Chris Schott said in reiterating an chubby rating on Lilly shares, “… although shares trade at a significant premium to comparable products, we see unprecedented growth for LLY over the next decade, led by the company’s incretin franchise.” Schott expects Lilly’s incretin drugs to generate sales of $68 billion or more by 2030 and proceed to grow from there. His $1,000 price goal suggests shares could rise nearly 30% from Wednesday’s close. That goal is above Wall Street’s average price of $941.55.
