Eli Lilly stock surged within striking distance of a breakout in late April after the company reported a mixed first quarter that included strong sales of weight-loss drug Zepbound.
Zepbound is made from tirzepatide, the same chemical backbone behind diabetes drug Mounjaro. In the first quarter, sales of both rocketed higher, but only Zepbound sales topped expectations. Sales of Mounjaro and another diabetes treatment, Trulicity, lagged forecasts. Still, Lilly says it's increasing production this year and raised its sales outlook by $2 billion.
Shares are now closing in on a buy point out of a flat base, MarketSurge shows.
Earlier this month, Eli Lilly said patients with obstructive sleep apnea had 55% to nearly 63% fewer nighttime incidents while taking its weight-loss drug. The results outperformed a placebo group and sent Eli Lilly stock briefly above its 50-day moving average. Now, Lilly is planning to ask the Food and Drug Administration to sign off on tirzepatide as a sleep apnea treatment.
Lilly is also working on next-generation drugs, including a daily pill called orforglipron in patients with type 2 diabetes and obesity. And its next-generation drug — which targets three hormones — could stoke even further weight loss. Bank of America Securities analyst Geoff Meacham expects tirzepatide to bring in $62 billion in 2030 and for the next-generation drugs to add $19 billion to that.
But others are coming and could rock Eli Lilly stock. Viking Therapeutics soared after its weight-loss drug topped Zepbound's Phase 3 results. Recently, Madrigal Pharmaceuticals gained approval for the first-ever MASH treatment. MASH is a metabolic disease associated with obesity. Lilly is also testing tirzepatide in MASH treatment.
Eli Lilly is working to gain approval for its Alzheimer's treatment, a potential rival to Biogen and Eisai's Leqembi. But the Food and Drug Administration said it would hold an advisory committee meeting to discuss the drug's risks and benefits. Analysts noted the FDA will likely focus on brain swelling tied to drugs in this class.
Meanwhile, Lilly locked up its acquisition of Point Biopharma, an expert in radioligand treatments for cancer. The company ties a radioisotope to a molecule capable of finding cancer cells in the body. This allows the drug to deliver targeted radiation directly to the tumor, limiting the impact on healthy tissue.
So, is Eli Lilly stock a buy right now?
Eli Lilly Stock: Bullish Sales Growth
In the first quarter, Lilly earned an adjusted $2.58 per share on $8.77 billion in sales. Earnings grew 59% and beat forecasts for $2.47. Sales climbed 26%, but lagged calls for $8.94 billion, according to FactSet.
Mounjaro and Trulicity were partly to blame for the light sales quarter. Mounjaro brought in $1.81 billion in sales, but missed expectations for $2.15 billion. Trulicity, another diabetes treatment, had $1.46 billion in first-quarter sales, down 26% and below the $1.63 billion Street forecast.
Further, sales of breast cancer drug Verzenio and diabetes med Jardiance came up short.
But Zepbound sales shined, bringing in $517.4 million, whereas analysts expected just $373 million. Leerink Partners analyst David Risinger notes two-thirds of commercially covered patients had access to the weight-loss drug as of April 1, up from a third on Feb. 1.
Bullish first-quarter sales and earnings line up with savvy investing advice, which suggests investors look for companies with recent growth of at least 20% to 25%. But the second quarter could come out just below that benchmark, with earnings expected to grow 31% to $2.76 a share, but sales projected to grow a lower 19% to $9.88 billion.
LLY Stock: What Are Eli Lilly Yearly Earnings?
In 2023, Eli Lilly earned $6.32 a share, minus some items, on $34.12 billion in sales. Profit fell 20.4% but topped expectations for $6.23. Sales jumped 20% and came in above forecasts for $33.65 billion, according to FactSet.
Notably, Mounjaro generated $5.16 billion in sales, jetting higher from $482.5 million in 2022 sales. Revenue from Verzenio and Jardiance came in at a respective $3.86 billion and $2.74 billion. Sales of Verzenio surged 56%, while Jardiance sales rocketed 33%.
After the first-quarter report, Eli Lilly guided to $42.4 billion to $43.6 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 $13.50 to $14 a share Both measures topped analysts' forecasts.
Wall Street expects Mounjaro to bring in $10.23 billion in sales this year, growing more than 98% year over year. Zepbound is projected to generate $3.61 billion in sales. In 2029, analysts expect the two drugs to bring in $23.81 billion and $16.36 billion in sales, respectively.
LLY stock analysts also expect Alzheimer's drug donanemab to bring in $139 million in 2024 sales and reaching blockbuster status with $1.47 billion in 2026.
Meanwhile, sales from blockbuster insulins Humalog and Humulin are expected to fall now that Lilly has announced price cuts. Sales of generics-facing Alimta, a cancer drug, are also forecast to drop.
Eli Lilly Stock Analysis
Eli Lilly stock is forming a flat base with a buy point at 800.78, according to MarketSurge.
Shares retook their 50-day line on April 30, following the Zepbound beat and guidance boost. Eli Lilly stock is also well above its 200-day moving average.
Eli Lilly stock has a Relative Strength Rating of 93 out of a best-possible 99, IBD Digital shows. This puts shares in the top 7% of all stocks when it comes to 12-month performance. Shares have a Composite Rating of 89, a measure of fundamental and technical metrics.
Alzheimer's Treatment News Hits LLY Stock
Eli Lilly is angling for FDA approval of donanemab, a potential Alzheimer's treatment that removes built-up plaque in the brain known as beta amyloid. Beta amyloid is a hallmark of the disease, though experts don't necessarily agree that it's the cause.
The FDA just said it plans to hold an advisory committee meeting to discuss the effectiveness and safety of donanemab in the study called Trailblazer-ALZ 2. The decision effectively pushes back the approval decision, which was expected before the end of this month.
Biogen's Leqembi gained full approval for Alzheimer's treatment based on its ability to remove amyloid. In mid-July, Lilly said patients who received its drug for 18 months had a 22%-29% slower decline in cognition than placebo recipients.
The results were even stronger in patients with medium levels of a protein called tau in their brains. Donanemab led to a 35%-36% slower cognitive decline compared with a placebo.
Experts noted that donanemab does a better job of clearing away beta amyloid than Biogen's Leqembi. But that could lead to higher levels of a side effect called amyloid-related imaging abnormalities, or ARIA. This is generally asymptomatic swelling in the brain.
Eli Lilly Stock Investors Watch Weight-Loss Drugs
Investors in Eli Lilly stock are waiting for more from Lilly's efforts in obesity treatment. The FDA has signed off on its tirzepatide in patients with type 2 diabetes and as a weight-loss drug. Lilly also recently launched a direct-to-consumer website to help bolster sales of both.
In December, Lilly said patients who took Zepbound for eight months lost an average of 20.9% of their body weight. But when a group of patients switch to a placebo, they regained 14% of their weight over a year. Those who stayed on Zepbound lost an additional 5.5% of their weight.
In another analysis of electronic health records, patients who took tirzepatide for a year were three times more likely than recipients of Novo's semaglutide to lose at least 15% of their body weight. Novo sells semaglutide as diabetes treatments known as Ozempic and Rybelsus, and as a weight-loss drug called Wegovy. Semaglutide recipients were also 2.6 times and 1.8 times more likely to lose at least 10% and 5% of their weight, respectively.
Lilly's next-generation approach called retatrutide adds in a third target called the glucagon receptor, and could be an eventual boon for Eli Lilly stock. In theory, this could lead to improved weight loss. Over 24 weeks, overweight patients or those with obesity who received retatrutide lost up to 17.5% of their weight. At 48 weeks, patients lost up to 24.2% of their body weight.
Mounjaro had already set a high bar. Last June, Lilly said patients lost up to 15% of their body weight over 72 weeks. Lilly tested the drug in patients with type 2 diabetes and obesity. In patients without diabetes, the drug generated even stronger weight loss, up to 22.5% of their body weight.
Lilly is also testing Mounjaro's ability to improve morbidity and mortality in patients with obesity or those who are overweight. The results of that study are expected in late 2027.
In August, Novo Nordisk said its obesity drug Wegovy cut the risk of cardiovascular events — like heart attack or stroke — in a five-year study. This could help make the case for insurance coverage of weight-loss drugs for patients who have or are at risk of cardiovascular disease. Later in the year, Novo said a weekly shot of Ozempic helped stave off renal impairment and reduced the risk of death due to kidney or cardiovascular disease in patients with type 2 diabetes and chronic kidney disease.
Lilly just acquired Versanis Bio, which has a drug that could improve fat loss while limiting muscle mass loss associated with GLP-1 drugs. Further, Lilly entered into a collaboration with Verve Therapeutics to test three potential gene-editing approaches to permanently lowering cholesterol.
Less promisingly, on April 10, Lilly said patients who received its diabetes drug, Jardiance, after having a heart attack only had a 10% reduced risk of heart failure or death over 26 months. The results didn't meet statistical significance.
Is LLY Stock A Buy Right Now?
Lilly stock isn't currently a buy. Shares just surged above their 50-day line — a promising sign. But the stock has yet to break out of a flat base.
Lilly also reported strong first-quarter sales and earnings growth. But that sales growth lagged Street expectations, though earnings easily beat.
It will be key to watch how the markets for weight-loss drugs and Alzheimer's treatments unfold.
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Follow Allison Gatlin on Twitter at @IBD_AGatlin.
