Eli Lilly shares rose Thursday after the drugmaker posted a strong third quarter, boosted by sales of its popular GLP-1 drugs. The company also raised its full-year sales outlook for the second consecutive time, inspiring confidence in the franchise's trajectory. Revenue in the three months ended Sept. 30 rose 54% year over year to $17.6 billion, beating Wall Street expectations of $16.01 billion, according to LSEG. Adjusted earnings per share rose 494% year over year to $7.02, ahead of the consensus of $5.69, LSEG data showed. In the third quarter of last year, per-share earnings of $1.18 included $3.08 per share in charges related to DPI and D, or acquired in-process research and development, recognized, largely from its deal with Morphic. Simply put, this was a great quarter, up and down, with GLP-1 revenues collectively surpassing the FactSet consensus estimate by about $1.16 billion. The reaction was much better than the last time Lilly reported in August. Shares fell 14%, falling to $640 per share on disappointing weight loss data for its oral drug GLP-1, or forglipron. The results of those tests overshadowed what was a good quarter. LLY YTD mountain Eli Lilly YTD At the time, we immediately downgraded Lilly to our 3 Penalty Box Rating, but quickly upgraded it twice to our equivalent 1 Buy rating less than a week later at around $660 following a flurry of insider buying activity from company leaders, including Lilly CEO David Ricks and Chief Scientific Officer Daniel Skovronsky. Lilly shares have risen nearly 30% since those insider purchases were revealed, a stark reminder of why insider activity is worth watching, especially when it occurs during times of apparent stress. In that context, we reiterate our 1 rating and raise our price target on Lilly to $925 from $800 due to strong revenue and earnings per share performance. Lilly shares rose about 4% after Thursday morning's release, bringing its year-to-date gain to about 10%. Commentary Eli Lilly's GLP-1 franchise drove quarterly pace, outperforming Mounjaro in type 2 diabetes and Zepbound in weight loss. By geography, Lilly's earnings presentation showed that the total US market for incretin analogues (the drug category to which GLP-1s belong) increased 36% year over year in the third quarter. This is a faster pace than the 7% year-over-year growth in the second quarter. This tells us that the size of the US pie increased substantially in the quarter. It's also important to note that Lilly gained share. According to its presentation, Lilly's market share increased to 57.9%, up one percentage point from the second quarter. What's notable about this market share increase is that it came after Novo Nordisk's Wegovy was named the preferred GLP-1 obesity drug at CVS Caremark on July 1. Eli Lilly shares fell significantly when this was announced in May, and so far, the results haven't been as bad as the market originally feared. Ricks described the impact as “modest” in the results call. Novo Nordisk, which is Lilly's main competitor in GLP-1, is also the maker of Ozempic for type 2 diabetes. Lilly's quarterly performance in the United States was strong, but the main driver of the pace came from markets outside the United States. “Really the advantage here versus the Street was driven by really strong international performance,” CEO David Ricks said on “Squawk on the Street” of Mounjaro's launches in China, India and Brazil earlier this year. “What we're seeing is global demand for this product.” Looking ahead, Lilly continues to plan to fill its once-daily oral extract of GLP1, or forglipron, for approval in the treatment of obesity later this year. Management anticipates a US launch for obesity next year, with a presentation for the treatment of type 2 diabetes sometime in the first half of 2026. We remain very optimistic about this oral GLP-1 medication because it is targeted at patients who suffer from needle anxiety and prefer not to use injectables. It's also much easier to store; does not require cold storage; and it's also much easier for Lilly to scale manufacturing. We mentioned on Tuesday that Ricks said at an event that the company had already manufactured “billions of doses” of the pill in preparation for next year's launch. That shows a lot of confidence in this market opportunity. We also look forward to upcoming essays that could expand on Mounjaro and Zepbound's guidance. Some areas Lilly is testing or planning to test include knee and back pain, addiction and smoking cessation. Guidance Eli Lilly raised its full-year revenue outlook to the range of $63 billion to $63.5 billion, up from its previous view of $60 billion to $62 billion. The $63.25 billion midpoint of the new outlook is above the consensus estimate of $61.74 billion and implies fourth-quarter revenue of about $17.36 billion, which is above the consensus estimate of $17.29 billion. Lilly also raised its outlook for full-year adjusted earnings per share to a range of $23.00 to $23.70, up from the previous range of $21.75 to $22.30. The $23.35 midpoint of the new outlook is above the consensus estimate of $22.48. Why We Own Them Eli Lilly's top drugs should enable growth above the industry average for many years to come. The portfolio is based on its GLP-1 franchise, which currently consists of Mounjaro for type 2 diabetes and Zepbound for obesity. This fast-growing class of drugs has the potential to treat other conditions, such as sleep apnea, and reduce the risk of stroke. Competitors: Novo Nordisk, Biogen, Eisai, Merck, and Pfizer Portfolio Weight: 2.72% Most Recent Purchase: May 22, 2025 Initiated: October 8, 2021 (Jim Cramer's Charitable Trust is long LLY. See here for a full list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable fund's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS OR IS CREATED BY VIRTUE OF THE RECEIPT OF ANY INFORMATION PROVIDED IN RELATION TO THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR BENEFITS ARE GUARANTEED.
