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Eli Lilly And Co (NYSE:LLY) reported on Thursday second-quarter revenue of $11.3 billion, up 36% year-over-year, easily surpassing the consensus of $9.95 billion.
Mounjaro sales tripled to $3.09 billion from $979.7 million a year ago. Zepbound sales reached $1.24 billion, up from $517.4 million reported in the first quarter of 2024 since it received FDA approval in November 2023.
Goldman Sachs noted that Eli Lilly’s second-quarter performance benefited from better channel dynamics and clearer manufacturing processes. However, they warned that rising demand might lead to occasional supply shortages for specific presentations and dose levels.
“The guidance raise is impressive,” the analyst Chris Shibutani adds, raising the price target to $856 from $812.
The analyst maintains a Neutral rating as Goldman Sachs is closely watching the narrowing supply/demand gap, which reassures them about execution but raises questions about the total addressable market (TAM), competitor pipeline programs and the sustainability of pricing dynamics amid heightened expectations following recent results.
Truist Securities says Mounjaro and Zepbound continue to outperform.
“We believe the recent lift of tirzepatide from the FDA shortage list could support a leadership position in obesity/diabetes management,” analyst Srikripa Devarakonda adds.
The analyst notes that tirzepatide could potentially be expanded for use in obstructive sleep apnea, osteoarthritis, cardiovascular issues, and renal conditions. They also see the potential for growth from upcoming developments, such as orforglipron, an oral GLP-1 for weight loss. Eli Lilly continues to invest in research and development across its main therapeutic areas to broaden its portfolio beyond its type 2 diabetes and obesity treatments.
Truist maintains the Buy rating with a price target of $1,000.
Damien Conover, Morningstar director of healthcare equity research, also increased the fair value estimate for “wide moat” Eli Lilly to $580 from $540. “However, we believe the stock still looks overvalued,” the analyst adds.
The analyst forecasts strong sales for Mounjaro and Zepbound but believes the market is overly optimistic. Factors such as anticipated price drops, high patient costs, future competition beyond Novo Nordisk A/S (NYSE:NVO), tolerability concerns, and potential long-term safety issues might not be fully considered.
On the pipeline, Morningstar is bullish on Eli Lilly’s next-generation oral weight-loss drug, orforglipron.
The recent launch of the Alzheimer’s drug Kisunla has the potential to become a major blockbuster, though Morningstar analyst anticipates a gradual increase in its market uptake.
LLY Price Action: Eli Lilly And Co. stock is up 5.58% at $892.50 at last check Friday.
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