Eli Lilly surprises with rapid growth: What investors should know before August 8

While one usually expects stable, moderate profit increases from a major pharmaceutical company like Eli Lilly, the pharma giant is currently painting a different picture: Instead of growing at a leisurely pace, Lilly now resembles a rapidly expanding growth company. Over the past three years, Lilly's stock price has surged by approximately 230%, with an increase of more than 75% in the past year alone. The primary reason for these impressive gains is the company's popular weight-loss medications. Currently, Lilly markets two such products, Mounjaro and Zepbound, with other candidates in advanced clinical trials. Together, Mounjaro and Zepbound are generating billions in revenue, and demand is rising rapidly. This boom is also reflected in the company’s recent earnings reports: they posted double-digit revenue growth rates. Investors are eagerly anticipating the next quarterly figures, which will be presented on August 8th. Should investors consider acquiring this promising stock before this date? Lilly’s performance thus far provides a preliminary indication. Lilly’s product portfolio is diverse and includes medications in various therapeutic areas such as immunology and neuroscience. Many of these medications contribute to revenue growth, but two stand out: the dual GIP and GLP-1 receptor agonists Mounjaro and Zepbound. Mounjaro was approved for the treatment of type 2 diabetes but is also frequently prescribed for obesity. Zepbound is specifically approved for weight reduction. Both medications are based on tirzepatide, a molecule that affects hormones regulating blood sugar levels and appetite. In the last quarter, Mounjaro generated $1.8 billion in revenue, while Zepbound generated $517 million in its first full quarter of marketing. Zepbound received its market approval only at the end of last year. In regard to Lilly’s current quarterly report, the company raised its annual revenue forecast by $2 billion, to a range of $42.4 to $43.6 billion. This is mainly due to the strong performance of the weight-loss products. The key question will be whether Lilly has been able to expand production to meet high demand and whether the company can maintain its forecast. Exciting news could also be expected regarding Zepbound. If the drug replicates its performance from the first quarter, it could soon be at a blockbuster level. Additionally, Lilly might provide an update in the quarterly report on the progress of its oral weight-loss drug Orforglipron, currently in a Phase 3 study. This once-daily medication could play a crucial role in future growth and help Lilly stay a step ahead of potential competitors. Pfizer recently announced the development of a competing once-daily product, which may be slightly behind Lilly’s timeline. Another point of interest for investors is the recent stock price of over $900. It is conceivable that Lilly might announce a stock split to lower the price per share, making it easier for a broader investor base to enter – a strategy also employed by stock giants like Nvidia and Walmart. Although it is uncertain what the pharma giant will present in the upcoming report, past successes provide grounds for optimism. So, should you invest in Lilly shares before August 8th? Long-term investors need not worry about buying a specific stock at a specific time. Even if Lilly's shares jump after the quarterly report, this should not seriously impact the returns over a multi-year holding period. Thus, Lilly remains a solid investment both now and after the upcoming quarterly figures.