We're increasing our Eli Lilly price target after another beat-and-raise quarter

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Revenue in the three months ended in June increased 48% from a year ago to $22.97 billion, crushing the LSEG consensus of $20.7 billion. Adjusted earnings per share (EPS) totaled $8.38, a 33% year-over-year increase and well ahead of the $6.01 consensus, according to LSEG. Shares are up nearly 4% in afternoon trading. While they've moved off their highs of the day, we don't see that as anything more than short-term profit taking. Eli Lilly remains the leader in the GLP-1 space over main rival Novo Nordisk , the maker of Ozempic and Wegovy, and a cadre of aspiring competitors with drugs still in clinical trials. With the overall GLP-1 market growing 31% year over year in the U.S. and 74% internationally, we believe Lilly's results, pace of growth, and addressable-market opportunity more than justify staying the course as long-term investors. Therefore, we are increasing our price target to $1,300 from $1,200. We are maintaining our hold-equivalent 2 rating for the time being as we look for a better opportunity to upgrade the name. LLY YTD mountain Eli Lilly's stock performance so far in 2026. Bottom line This was another very strong quarter from Eli Lilly, powered by its crucial GLP-1 portfolio. Sales of both Zepbound and Mounjaro — its two injectable GLP-1 brands — exceeded expectations in the quarter. While Zepbound and Mounjaro both saw declining prices in the quarter, this was more than offset by strong volume growth. Both drugs share the active ingredient of tirzepatide. In the U.S., it's sold as Mounjaro for diabetes and Zepbound for obesity. In most international markets, tirzepatide is marketed as Mounjaro for both diabetes and obesity. In addition to broader availability globally, CEO David Ricks noted on the earnings call that GLP-1 access has expanded in the U.S. thanks to Medicare reimbursing obesity drugs for the first time. On July 1, the Centers for Medicare & Medicaid Services launched the so-called Medicare GLP-1 Bridge — a temporary program that gives some 20 million Americans coverage for GLP-1s to treat obesity for only $50 per month out of pocket. To put the number in context, Ricks said this represents a 35% increase for GLP-1 coverage in the United States. Though the impact of this is not in the numbers reported Wednesday, it is certainly a positive sign for demand in the ongoing third quarter and a couple beyond that. The GLP-1 Bridge expires at the end of 2027. Adoption of GLP-1 drugs is also growing thanks to new oral alternatives that hit the market this year — Lilly has Foundayo, while rival Novo has the Wegovy pill. Novo was first to the market in January. Foundayo was approved by the Food and Drug Administration on April 1 and launched shortly thereafter. So, the results reported Wednesday represented our first look at Foundayo revenue. Unfortunately, revenue of $98 million was a bit below expectations. Although we never like to see a miss, Ricks' comments on the early trends leave us with the view that this is a case of nothing more than new launch growing pains. Speaking on CNBC, Ricks said while oral Wegovy is ahead of Foundayo in terms of prescriptions, adoption is growing rapidly. Ricks also offered up some important points of consideration that may explain the slower start. In addition to launching first, Novo was able to keep the name Wegovy for its pill because it's the same active ingredient, just in an oral formulation. Foundayo, on the other hand, is a different molecule than Zepbound and required a new brand. With Foundayo being an entirely new medicine, doctors are less familiar with it and still in the process of better understanding who it may be appropriate for. As Eli Lilly has built more awareness with physicians, Ricks said adoption has increased. More access to formularies — meaning getting Foundayo added to the list of covered drugs for various health insurance plans — is also helping adoption, with CVS only adding the drug on June 1 . Aside from educating and gaining access within the industry, Eli Lilly has also stepped up its efforts on the consumer awareness front. In other words, it's promoting the drug with ads on TV and other places. While this marketing has only just started to ramp up, Ricks said that "just in a month, we've basically doubled consumer awareness." He continued, "Prescriptions have basically doubled in a month for Foundayo. So, we're pleased right now. About one out of four new starts on an oral, for patients who want an oral, are starting on our medicine, and that's growing each week." Foundayo is also making its way into international markets, where Lilly has seen impressive growth for its injectable GLP-1s recently, including again in the second quarter. On the earnings call, Ricks said Foundayo was launched for obesity in the United Arab Emirates and recently approved in Saudi Arabia and Mexico. Foundayo is under regulatory review in "over 40 additional countries and we look forward to additional approvals later this year," Ricks said. Importantly, Ricks also said Lilly still does not see any cannibalization of Zepbound following the launch of the oral alternatives. Rather, these new oral medications are simply serving to expand the addressable market. In fact, Ricks commented that "Zepbound [new patient starts] actually accelerated during these oral launches". With one in eight Americans on a branded GLP-1 drug and only one in 50 on one outside the U.S. — according to Ricks — it's clear that the booming category still has a ton of room to grow. Lilly remains first and foremost a GLP-1 story in the eyes of investors, but the company does sell drugs to treat a range of other diseases including immunology and cancer. And we like what we saw on this front. CFO Lucas Montarce said that within immunology, worldwide sales of eczema treatment Ebglyss more than doubled versus the year ago period, with market share gains realized in the U.S. The FDA approved Ebglyss in September 2024 . In oncology, blood-cancer therapy Jaypirca sales increased 56% worldwide. "We believe Jaypirca has the potential to be a foundational therapy across multiple settings and regimens within CCL," he said, referencing to chronic lymphocytic leukemia, the most common type of blood cancer in adults, according to the Cleveland Clinic. As for Inluriyo, which was approved in September 2025 for the treatment of certain forms of breast cancer, Montarce said that "after only two full quarters Inluriyo in the U.S. is [the] leader in new prescriptions, with more than 50% share." In neuroscience, Lilly's Alzheimer's treatment, known as Kisunla, saw sales more than triple year over year. Diagnostic testing momentum is increasing, Montarce said, resulting in more people being diagnosed with Alzheimer's and, in turn, seeking out treatment. In Neuroscience, Kisunla, designed for the treatment of Alzheimer's, sales more than tripled year over year. On the call, Montarce highlighted that diagnostic testing momentum is increasing, resulting in more people being diagnosed with Alzheimer's and, in turn, seeking out treatment. All in, Lilly's so-called key products portfolio grew 76% year over year. If we were to look only at the immunology, oncology and neuroscience portions of the portfolio, the growth rate jumps 121% year over year, as these drugs are all growing off of a much smaller base versus Mounjaro and Zepbound. Pipeline updates In the pharmaceutical industry, there's always a focus on what's coming down the pike because patents don't last forever. Dr. Daniel Skovronsky, Lilly's chief scientific and product officer, spent some time on the call talking about retatrutide, which is the company's next-generation obesity injectable. This drug is sometimes called "Triple G" because it targets three different hormones related to appetite: GLP-1, GIP, and glucagon. That is one more than the active ingredient behind Mounjaro and Zepbound, which targets just GLP-1 and GIP. Lilly has conducted a variety of trials under the Triumph name for retatrutide, looking at how the drug works in various patient populations to treat obesity and type 2 diabetes, and its ability to lower the risk of cardiovascular disease. "Across the Triumph program, we've seen profound levels of weight loss and improvements in A1C, cardiovascular risk factors, osteoarthritis, pain, and sleep apnea," Skovronsky said. Lilly said in late July that it plans to submit retatrutide for FDA approval in the first quarter of 2027. Management said Wednesday they remain in talks with the FDA on the process. Additionally, orforglipron, the active ingredient in Foundayo, is also under review for an expanded label, with Skovronsky noting that Lilly has completed its U.S. submission in type 2 diabetes. He referenced that Lilly's pill demonstrated superiority to Novo's in a head-to-head trial on both blood sugar control and weight reduction. "For the many people with type 2 diabetes who prefer an oral option and have delayed reaching their glycemic targets, we believe orforglipron has the potential to be a foundational daily oral treatment," he said. Guidance Here's an updated look at Lilly's full-year 2026 guidance: Revenue in the range of $85 to $87 billion (up from $82 to $85 billion). The new midpoint of $86 billion is ahead of the LSEG consensus of $85.45 billion. Performance margin, a Lilly-defined measure of operating profitability, in the range of 49% to 50.5% (up from 47% to 48.5%). Earnings per share in the range of $35.50 to $36.50 (compared with a prior range of $35.50 to $37 a piece). While that looks like a trim at the higher end, the team noted that the new guide actually represents a $2.78 per share increase at the midpoint, reflecting the stronger revenue forecast, after accounting for a $3.03 per share headwind resulting from Q2 2026 acquired In-Process Research and Development charges. (Jim Cramer's Charitable Trust is long LLY. See here for a full list of the 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 trust'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 INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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