Eli Lilly stock broke out bullishly Tuesday — surging 15% and adding $64 billion to its market cap — after the drugmaker walloped Wall Street's second-quarter forecasts partly due to diabetes treatment powerhouse Mounjaro.
Mounjaro sales skyrocketed by a quadruple-digit percentage, bringing in $979.7 million. That topped expectations by more than $200 million, Leerink Partners analyst David Risinger said in a note to clients. Third Bridge analyst Lee Brown says experts are "excited about Mounjaro." Lilly is now hoping the Food and Drug Administration will approve it for weight loss.
If that happens, Mounjaro will directly rival Novo Nordisk's Wegovy, the only approved drug in the GLP-1 class for obesity treatment. On Tuesday, Novo said a five-year study showed Wegovy reduced the risk of cardiovascular events. That includes heart attacks and strokes in overweight adults or those with obesity and cardiovascular disease, but not diabetes.
"This is good news for Eli Lilly, which is awaiting FDA approval for a weight-loss (use) in diabetes drug, Mounjaro," Edward Jones analyst John Boylan said in his note to clients. "Insurance plans still need to agree to reimburse for these drugs for certain patient types, but (Novo's study) results should open the door for this possibility."
Eli Lilly stock catapulted 14.9% to close at 521.60 on today's stock market. Novo shares rocketed 17.2% to close at 189.17. Both stocks broke out of flat bases. Eli Lilly stock topped a buy point at 469.87, according to MarketSmith.com. Novo's entry was at 172.97.
Eli Lilly Stock: Lilly Easily Beats Forecasts
Overall, Lilly earned an adjusted $2.11 per share on $8.31 billion in second-quarter sales. The two metrics easily topped Eli Lilly stock analyst forecasts for a respective $1.98 per share and $7.58 billion, according to FactSet.
Lilly's earnings soared almost 69%, though it benefited from a payment of 43 cents related to the sale of its hypoglycemia drug to Amphastar Pharmaceuticals, Third Bridge's Brown said in a note. Sales advanced 28%.
In addition to strong Mounjaro sales, Eli Lilly noted strength from cancer drug Verzenio. It also highlighted strength in diabetes treatment Jardiance and autoimmune drug Taltz. Sales of all three beat projections, Leerink's Risinger said in a note. Verzenio sales surged 57% to $926.8 million. Jardiance and Taltz revenue advanced 45% and 16%, respectively, to $668.3 million and $703.9 million.
Edward Jones' Boylan noted Eli Lilly is making progress in diabetes, obesity and Alzheimer's. The company expects regulators in the U.S. and Europe to make approval decisions on experimental Alzheimer's treatment before the year's end.
"But we believe our strong growth expectations are not reflected in the price of the shares," he said.
Lilly also raised its outlook for the year. It now expects to earn an adjusted $9.70 to $9.90 a share on $33.4 billion to $33.9 billion revenue. Eli Lilly stock analysts had called for earnings of $8.73 per share on $31.44 billion in sales.
Weight-Loss Drugs In Focus
Importantly, Novo's news could help make the case for broader insurance coverage of GLP-1 drugs Wegovy and Mounjaro. These drugs mimic a gut hormone tied to feelings of satiety and how quickly the stomach empties itself. They can also improve markers of type 2 diabetes.
Mounjaro isn't yet approved in obesity treatment, though Lilly hopes to win that nod this year. Novo, on the other hand, sells its drug semaglutide as a weight-loss medicine called Wegovy. It also sells it as diabetes drugs Ozempic and Rybelsus.
In Novo's study, patients without diabetes but established cardiovascular disease experienced a 20% reduction in the risk of heart attack, stroke or cardiovascular-related death over five years. Lilly is also running a study showing Mounjaro can improve morbidity and mortality. Those results are expected in October 2027, Leerink's Risinger said.
"The results (from Novo) beat our expectations and provide a perception positive for Lilly and the GLP-1 class in terms of payer coverage," he said.
He has an outperform rating on Eli Lilly stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
