Eli Lilly (LLY) stock hit an intraday record high on Aug. 22. The company recently said its weight-loss drug lowered the risk of developing diabetes by 94%.
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How Novo Nordisk, Wegovy And Ozempic Are Changing The Weight-Loss Game For Patients And Investors
After three years, patients with prediabetes and obesity who took Lilly’s tirzepatide had a 94% lower risk of developing type 2 diabetes. Patients also lost an average 22.9% of their body weight vs. just 2.1% weight loss for the placebo group.
The company also announced on Aug. 27 a lower-cost version of the same drug for weight loss. Single-dose vials of Zepbound will be available at least 50% below the list price of all other similar treatments for obesity.
On Sept. 4, Lilly unveiled an agreement with Eva Pharma to expand access to Olumiant, a treatment for inflammatory conditions. Incyte (INCY) discovered the drug and licensed it to Lilly.
Notably, Eli Lilly also knocked its second-quarter earnings out of the park. Its diabetes and weight-loss drugs Mounjaro and Zepbound — both forms of tirzepatide — beat expectations by $973 million. And Lilly hiked its sales outlook for the year by $3 billion.
The company also just wrapped its acquisition of Morphic Holding for $3.2 billion. The Morphic deal centers on the company’s lead asset, an experimental treatment for ulcerative colitis and Crohn’s disease.
So, is Lilly stock a buy or a sell right now?
Eli Lilly Stock: Bullish Sales Growth
In the second quarter, Eli Lilly earned an adjusted $3.92 per share on $11.3 billion in sales. Earnings skyrocketed 86% and crushed forecasts for $2.74 a share, according to FactSet. Sales advanced 36% and came in north of expectations for $9.97 billion.
Mounjaro and Zepbound both topped views, though diabetes treatment Trulicity came in light at $1.25 billion and fell 31%. Similarly, sales of another diabetes med, Jardiance, missed forecasts.
Promisingly, sales of breast cancer drug Verzenio, beat expectations and grew 28% to $1.33 billion.
For the third quarter, analysts expect $4.06 earnings per share and $11.02 billion in sales. Earnings would rocket by a quadruple-digit percentage as sales grow about 23%.
After the second-quarter report, Eli Lilly guided to $45.4 billion to $46.6 billion in 2024 sales. Lilly plans to bolster its production of diabetes and weight-loss drugs later this year. The company also calls for adjusted earnings of $15.10 to $15.60 per share. Both measures topped analysts’ forecasts.
Eli Lilly Stock Analysis
Eli Lilly stock isn’t currently forming a base. But shares are above their 50-day and 200-day moving averages.
Shares have a strong Relative Strength Rating of 94 out of a best-possible 99, IBD Digital shows. This puts shares in the top 6% of all stocks when it comes to 12-month performance. Lilly stock also has a perfect Composite Rating of 99, a measure of fundamental and technical metrics.
Recent News Around Lilly Stock
The race to develop new weight-loss drugs continues to heat up.
Lilly stock fell in July after Pfizer and Viking announced plans to run additional testing for obesity treatments. Roche’s test results also pressured Lilly shares.
Further, Eli Lilly stock fell after President Joe Biden and Sen. Bernie Sanders criticized the prices it and Novo Nordisk (NVO) charge for their obesity treatments, Zepbound and Wegovy.
Lilly is also working on a next-generation weekly shot called retatrutide. While tirzepatide loops in two hormonal targets to stoke weight loss, retatrutide targets three. Its oral weight-loss drug, dubbed orforglipron, is also expected to be the first weight-loss pill to hit the market.
In other news, Lilly’s Alzheimer’s drug, donanemab, gained Food and Drug Administration approval in July. It will sell under the brand name Kisunla.
Kisunla works by removing a built-up protein called beta amyloid. In testing, Kisunla worked better in patients whose amyloid included a protein called tau. Across all patients, donanemab slowed cognitive decline by 22% to 29% over 18 months. In patients with intermediate levels of tau, donanemab slowed the decline by 35% to 36%.
It rivals Biogen (BIIB) and Eisai‘s (ESAIY) Leqembi.
Is LLY Stock A Buy Or A Sell Right Now?
Eli Lilly stock is neither a buy nor a sell. Shares retook their 50-day line on Aug. 9 — a bullish sign. But the stock isn’t forming a base for investors to watch.
Promisingly, Lilly reported strong second-quarter sales and earnings growth that beat expectations.
It will be key to watch how the markets for weight-loss drugs and Alzheimer’s treatments unfold.
To find the best stocks to buy and watch, check out IBD Stock Lists. Make sure to also keep tabs on stocks to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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