1. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 106
While talking about a leading global pharmaceutical company, Eli Lilly and Company (NYSE:LLY), Cramer said:
“I want to start with a stock that got pummeled today. Eli Lilly, pulverized. Here’s a company that pre-announced $58 to $61 billion in revenue next year, substantially better than expected on the back of those GLP-1 drugs, approved for diabetes, weight loss, and now obstructive sleep apnea. There’s just one problem here. Lilly’s fourth-quarter estimates, the fourth quarter that we just finished, they aren’t as strong as Wall Street was hoping.”
Cramer noted that the company had a volatile recently, moving from the top of the S&P 500 to the bottom, where it ended up on Tuesday. He pointed out that, despite the company’s large presence, its performance that day was so poor that it lagged behind the other 499 companies in the index. Cramer acknowledged the disappointment but remained somewhat unfazed by the drop, explaining to viewers of his CNBC Investing Club that he sees this as an opportunity.
“See, I’m thinking that Lilly’s wonder drug Mounjaro, also known as Zepbound, has way too many potential indications to write it off because of one subpar quarter. This drug, I believe, will work against hypertension, known as the silent killer, heart failure, complicated liver disease, joints, dementia, and yes, heavy drinking.
It has so many uses that Lilly’s spending $20 billion to build out manufacturing so it can meet the demand even though there’s a very capable competitor, Novo Nordisk, and there are a lot of companies trying to get into space.”
Cramer pointed out that Eli Lilly’s (NYSE:LLY) investment in GLP-1 drugs is crucial, as these medications are not easy to manufacture. He believes the company’s spending in this area will help keep competitors from catching up. However, Cramer also acknowledged that, in the short term, the company has not done an ideal job in launching the drug, and he expressed his disappointment with that aspect of their performance.
“I’m not thrilled about that either. I gotta tell you, however, I can’t think of a better chance to buy the stock on weakness given that Mounjaro has grown faster than any other large drug. So let me ask you, do we want the fastest ramp-up, or do we want the biggest drug of all time? The so-called community of analysts wants the former, I’ll take the latter any day of the week. Oh, did I mention they’ll soon have this weight loss drug in pill form, not just injectable for those who don’t like to give themselves a shot once a week?
Of course, it’s not just the botched launch that’s holding Lilly back. Bobby Kennedy, Jr. (Robert Kennedy Jr.), Trump’s nominee for Health and Human Services is universally known as an anti-vaccine proponent. Now that’s true, but you can also think of him as a believer in diet and exercise. He’s not a huge fan of the GLP-1 drugs, but the food industry has made that diet and exercise regimen almost impossible for most people. So why not let those who can’t diet or exercise enough, take the shot?”
Cramer also pointed out a significant head-and-shoulders pattern in Eli Lilly’s (NYSE:LLY) stock chart, which is often seen as a warning sign. He acknowledged that, in the short term, the outlook for the company may appear bleak. However, Cramer expressed his confidence in the company’s long-term prospects, stating that he remains a firm believer in Eli Lilly’s potential. His advice to investors? “Buy, buy, buy” the stock, indicating his optimism for the future despite the current challenges.
While we acknowledge the potential of Eli Lilly and Company (NYSE:LLY) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
