We’re raising our price target on Eli Lilly – what a difference a quarter makes
Posted by Israel News | Dec 1, 2025 | Health | 0 |
Shares of Eli Lilly jumped on Thursday after the drugmaker posted a strong third quarter driven by sales of its popular GLP-1 drugs. The company also raised its full-year revenue forecast for the second consecutive year, providing confidence in the franchise’s performance. According to LSEG, revenue rose 54% year-on-year to $17.6 billion in the three months ended Sept. 30, beating Wall Street expectations of $16.01 billion. Adjusted earnings per share rose 494% year over year to $7.02, above the consensus of $5.69, LSEG data showed. In last year’s third quarter, EPS of $1.18 included $3.08 per share of costs related to IPR&D or recognized acquired ongoing research and development work, most of which resulted from the Morphic deal. The bottom line is that it was a great quarter, with ups and downs, with overall GLP-1 revenue beating the FactSet consensus estimate by about $1.16 billion. The response was much better than the last time Lilly reported in August. The stock fell 14%, falling to $640 per share on disappointing weight loss data for the oral GLP-1 drug orforglipron. These test results overshadowed a strong quarter. LLY YTD Mountain Eli Lilly YTD At the time, we immediately downgraded Lilly to our Penalty Bank Rating of 3, but quickly downgraded it back to our Buy rating of 1 at around $660 less than a week later after a flurry of insider buying activity from management, including Lilly CEO David Ricks and Chief Scientific Officer Daniel Skovronsky. Lilly shares have risen nearly 30% since these insider purchases were disclosed – a stark reminder of why insider activity is worth watching, especially when it occurs during times of obvious stress. With this in mind, we reiterate our rating of 1 and increase our price target for Lilly from $800 to $925 due to strong sales and earnings per share performance. Lilly shares rose about 4% after the release Thursday morning, putting its year-to-date gain at about 10%. Commentary: Eli Lilly’s GLP-1 franchise was the top performer quarter-over-quarter, with Mounjaro outperforming in type 2 diabetes and Zepbound outperforming in weight loss. Geographically, Lilly’s earnings presentation showed that the overall U.S. market for incretin analogs (the category of drugs under which GLP-1 falls) increased 36% in the third quarter compared to the previous year. That’s a faster pace than the 7% year-over-year growth in the second quarter. This tells us that the size of the US pie increased significantly this quarter. It’s also important to note that Lilly has been gaining market share. According to the presentation, Lilly’s market share increased to 57.9%, up one percentage point from the second quarter. What’s notable about this market share gain is that it comes after Novo Nordisk’s Wegovy was named the preferred GLP-1 obesity drug at CVS Caremark on July 1. Eli Lilly shares fell sharply when this was announced in May, and so far the results have not been nearly as bad as the market originally feared. Ricks described the impact on the earnings announcement as “modest.” Novo Nordisk, Lilly’s main competitor in GLP-1, is also the manufacturer of Ozempic for type 2 diabetes. Lilly’s quarterly performance in the United States was solid, but the main driver of the increase came from markets outside the United States. “The real upside here relative to the Street was driven by a really strong international performance,” CEO David Ricks said on “Squawk on the Street” about Mounjaro’s launches in China, India and Brazil earlier this year. “What we are seeing is global demand for this product.” Looking forward, Lilly continues to plan to launch its once-daily oral GLP1 pull product orforglipron for approval in obesity later this year. Management expects a U.S. launch next year for the treatment of obesity and an application for the treatment of type 2 diabetes sometime in the first half of 2026. We remain very optimistic about this oral GLP-1 drug as it is aimed at patients who suffer from needle fear and do not want to use injections. It’s also much easier to store; it does not require cold storage; Plus, it’s much easier for Lilly to scale production. We mentioned on Tuesday that Ricks said at an event that the company had already manufactured “billions of doses” of the pill in preparation for its launch next year. This shows great confidence in this market opportunity. We also look forward to upcoming studies that may expand the indications of Mounjaro and Zepbound. Some areas in which Lilly is testing or planning to test include knee and back pain, addiction and smoking cessation. Guidance Eli Lilly raised its full-year revenue forecast to $63 billion to $63.5 billion from $60 billion to $62 billion. The median figure of $63.25 billion in the new forecast is above the consensus estimate of $61.74 billion and implies fourth-quarter revenue of about $17.36 billion, above the consensus estimate of $17.29 billion. Lilly also raised its full-year adjusted earnings per share forecast to a range of $23.00 to $23.70, up from its previous range of $21.75 to $22.30. The median of the new outlook is $23.35, above the consensus estimate of $22.48. Why We Own It: Eli Lilly’s best-in-class medicines are expected to deliver above-industry growth for many years to come. The portfolio is based on the GLP-1 franchise, which currently consists of Mounjaro for type 2 diabetes and Zepbound for obesity. The rapidly growing class of drugs has the potential to treat other conditions such as sleep apnea and reduce the risk of stroke. Competitors: Novo Nordisk, Biogen, Eisai, Merck and Pfizer Portfolio Weight: 2.72% Last Purchased: May 22, 2025 Initiated: October 8, 2021 (Jim Cramer’s Charitable Trust is long LLY. See a full list of stocks here.) As a subscriber to 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 foundation’s portfolio. If Jim discussed a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. THE INVESTING CLUB INFORMATION SET FORTH ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, ALONG WITH OUR DISCLAIMER. THERE ARE NO fiduciary duty or duty IN RECEIVING YOUR INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
