Eli Lilly shares surge on a beat-and-raise, proving the stock's swoon was a mistake

An important development from the financial markets: Obesity drug giant Eli Lilly on Thursday reported a monster first quarter, fortifying our conviction to stick with the stock after a period of sluggishness. Revenue in the three months ended in March jumped 56% from a year ago to $19. 8 billion, trouncing the LSEG consensus of $17.

Adjusted earnings per share totaled $8. 55, more than doubling on an annual basis and crushing the $6. 66 consensus, according to LSEG.

Economic Details

LLY 1Y mountain Eli Lilly's stock performance over the past 12 months. Shares surged about 10% on Thursday. The stock came into the day down 21% for the year and roughly 23% off its late November all-time closing high of $1,110.

The weakness in the stock was tied to a broader rotation away from the healthcare sector, and broader questions about the competitive dynamics in the booming GLP-1 market. Bottom line Lilly knocked it out of the park. As if the massive top and bottom-line beats were not enough, the drugmaker raised its full-year guidance for revenue, operating profitability and earnings per share.

"This is one of the greatest pharma stories," Jim Cramer said Thursday. A big reason why Lilly's results are so impressive: It's doing this despite weaker realized drug prices in the U. , partially stemming from most favored nation agreements with the Trump administration in exchange for Medicare access.

Analyst Views

Competition from Novo Nordisk , the maker of Ozempic for diabetes and Wegovy for weight loss, is another factor. Regardless, Eli Lilly CEO David Ricks has insisted his company will be able to overcome lower prices with higher volumes — and that's what is happening. In the first quarter, pricing fell 7% in the U.

, but volumes jumped 49% driven by its injectable GLP-1s, Zepbound for obesity and Mounjaro for type 2 diabetes. (Both drugs share the active ingredient of tirzepatide. ) The dynamic was actually even more pronounced on a worldwide basis, with pricing down 13% and volumes up 65%.

China was a big driver of the weaker prices globally. Mounjaro fueled the volumes gains internationally, where it is marketed for both obesity and diabetes. The international strength of Mounjaro has been a standout theme recently, and that was the case again in the first quarter.

Financial markets are tracking the development closely as investors assess the likely impact.