Eli Lilly & Co. investors were having their best day in more than two decades on Tuesday, after the drug giant reported second-quarter earnings that beat expectations, and after favorable trial results for rival obesity drug helped boost prospects for Lilly’s Mounjaro.
BofA Securities analyst Geoff Meacham reiterated his buy rating on Lilly’s stock
LLY,
citing the “strong” second-quarter print, fueled by Mounjaro strength, and the “overhang removed” after Novo Nordisk’s
NVO,
NOVO.B,
Wegovy obesity treatment met the primary endpoint in a Select trial.
Wolfe Research analysts said Wegovy’s success has positive implications for Lilly, as the study showed that losing weight would lower heart attacks. The Wegovy showing was the “best case scenario,” Wolfe analysts said, as many insurers have historically not covered obesity drugs because they felt it to be a lifestyle issue rather than a health issue.
Lilly’s Mounjaro, or tirzepatide, is a diabetes treatment that has also been show to help with weight loss.
“[W]e’re confident in the experiences that people who use Mounjaro for Type 2 diabetes have, and we’re excited to see what that will be for people in chronic weight management when and if we get approved by the [Food and Drug Administration],” said Mike Mason, president of Lilly Diabetes, on the post-earnings conference call with analysts, according to an AlphaSense transcript.
Lilly’s stock rocketed 16.5% in midday trading, to surpass its previous record close of $468.98 on June 30 by a wide margin. It was also on track to book its biggest one-day gain since its record rally of 17.7% on June 29, 2000.
The stock’s rally boosted Lilly’s market capitalization to $502.2 billion. That’s enough to make Lilly the ninth-most valuable company in the S&P 500 index
SPX,
as it leapfrogged fellow drugmaker Johnson & Johnson’s
JNJ,
market cap of $448.2 billion.
Among other S&P 500 rivals, Dow Jones Industrial Average
DJIA
components Merck & Co. Inc.’s
MRK,
market cap sat well below at $270.5 billion and Pfizer Inc.’s
PFE,
market cap was at $200.6 billion.
Earlier Tuesday, Lilly reported second-quarter net income that jumped to $1.76 billion, or $1.95 a share, from $952.5 million, or $1.05 a share, in the same period a year ago.
Excluding nonrecurring items, adjusted earnings per share of $2.11 beat the FactSet consensus of $1.98.
Revenue grew 28.1% to $8.31 billion, well above the FactSet consensus of $7.58 billion. Volume increased 29%, driven by growth in Mounjaro, Verzenio, Jardiance and Taltz, partially offset by lower volume from Alimta due to the loss of exclusivity.
Mounjaro revenue rose to $979.7 million, from $16 million a year ago, to beat the FactSet consensus of $739.8 million by a wide margin.
For 2023, the company raised its guidance ranges for adjusted EPS to $9.70 to $9.90 from $8.65 to $8.85 and for revenue to $33.4 billion to $33.9 billion from $31.2 billion to $31.7 billion.
Lilly’s stock has rallied 44.6% year to date, while the SPDR S&P Pharmaceuticals ETF
XPH
has tacked on 7.1% and the S&P 500 has advanced 16.4%.
