You might expect Eli Lilly (LLY +1.97%) to perform as big pharma companies often do: offering progressive earnings gains that translate into a steady increase for the stock over the long term. But in recent times, Lilly hasn't exactly behaved like a slow and steady healthcare player, and instead has taken the path of a fast-moving growth stock.
Lilly has jumped about 230% over three years and more than 75% over the past year. The driver of these gains is excitement about one product portfolio in particular: weight loss drugs. The company sells two now -- Mounjaro and Zepbound -- and has more candidates in late-stage clinical trials. Mounjaro and Zepbound together are bringing in billion-dollar revenue, and demand is soaring.
In recent earnings reports, this has resulted in double-digit revenue growth for the company. And investors are eager to hear the latest from the pharma giant when it reports quarterly earnings on Aug. 8. Should you get in on this high-flying stock before then? Let's find out.
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Lilly's star products
First, a quick note on Lilly's accomplishments so far. The company has a broad product portfolio including drugs in a variety of treatment areas, from immunology to neuroscience. And many of these drugs are growing, helping to boost the company's quarterly revenue. But the two that stand out are its dual GIP and GLP-1 receptor agonists, Mounjaro and Zepbound.
Mounjaro is approved for type 2 diabetes but is often prescribed for obesity. Zepbound is approved specifically for weight loss. They are two different brand names for tirzepatide, a molecule that acts on hormones that control blood sugar levels and appetite.
In the most recent quarter, Mounjaro brought in $1.8 billion in revenue, while Zepbound generated $517 million in this first full quarter of commercialization. Zepbound won regulatory approval late last year.
Now, let's consider what we might expect in the company's second-quarter earnings report. In the last report, Lilly increased its full-year revenue guidance by $2 billion, to a range of $42.4 billion to $43.6 billion -- and this is due to the solid performance of the company's weight loss drugs. It will be important to see whether Lilly, which has struggled to keep up with demand for the drugs, has been able to expand production and can maintain this forecast.
Investors also may get some exciting news about Zepbound. If the drug repeats its first-quarter performance, it could find itself in, or close to, blockbuster territory.
NYSE: LLY
Key Data Points
Lilly's next potential weight loss drug
Also in the second-quarter report, the company may offer investors an update on the progress of its weight loss candidate orforglipron, currently in a phase 3 trial. This once-daily oral candidate could become an important growth driver down the road -- and help Lilly stay ahead of potential competition. Pfizer recently said it, too, is pursuing a once-daily oral candidate and that its time line could be just behind Lilly's.
Finally, Lilly might address something else that's been on investors' minds ever since the share price soared past $900 in recent weeks. The company could decide to follow in the footsteps of other stock-market giants -- like Nvidia and Walmart -- and announce a stock split. This is a way of lowering the per-share price without impacting the total market value of the company.
This would be a positive move, because a lower price per share opens up the investment opportunity to a broader range of investors.
Of course, it's impossible to predict exactly what the healthcare giant will have to say during its report, so these are just a few ideas. But considering performance during recent quarters, there's reason to be optimistic about what's ahead.
So, should you buy Lilly stock before Aug. 8? I consider it a buy right now, but when you're a long-term investor, you don't have to worry about rushing out to buy a particular stock at a particular time. Even if Lilly's shares jump after the earnings report, that movement is unlikely to seriously affect your returns if you hold onto the stock for five or 10 years.
And that means Lilly is a solid buy today -- and after its upcoming earnings report.
