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Jim Cramer - Mad Money Eli Lilly & Co. LLY-N STRONG BUY Dec 22, 2021

As the Fed is about to raise interest rates, buy companies that make real, concrete things. This includes pharmas. Since he started buying this in October, it's rallied. It's up 58% YTD. Last week, it held an investor day and soared 10% in one day, but then pulled back. Why he likes it? Their drug pipeline is the best in the industry. They spend a lot on R&D. In 2014, LLY that began delivering20 new drugs to the market. Seven could do north of $3 billion in sales, or 58% of company revenues. They won't lost patent protection for several years. Obesity, dementia and RNA-based drugs are their three main areas of focus. The first two are large (and sadly growing) markets. Their Alzheimer's drug data has been stronger than Biogen's. 2022 will see (likely, he feels) approval of these two drugs and could amount to $10-15 billion in sales. Great managers. Operating margin has leapt from 20.7% to 30%; managers predict rising to 35%. Their 2022 outlook is bullish with rising EPS. Plans to raise dividends and buyback shares in the future. R&D spending results in high results (revenues). Oncology is another area of strength.

Jim Cramer - Mad Money

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STRONG BUY

Data just released says that LLY's weight-loss drug is far better than peer Novo Nordisk. Buy this hand over fist.

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Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK

Stockchase Research Editor: Michael O'Reilly

This big pharma company has a host of weight loss GLP-1 medications that it will soon release progress reports on later this month, some of which have already received approvals to develop. It trades at 27x forward earnings and supports a 77% ROE. We recommend setting a stop-loss at $703, looking to achieve $987 -- upside potential over 20%. Yield 0.7%

(Analysts’ price target is $987.22)

PARTIAL SELL

He trimmed. Is trading at 33x PE, down from 55x. Is the front runner in the GLP-1 business with 60% market share.

BUY

The catalyst would be if they can deliver an oral weight-loss drug and he expects so. He agrees with today's upgrade.

BUY

Best among the weight-loss drugs, more effective than its peers. Also, the oral version will be a game-changer. LLY is gaining market share as its manufacturing ramps up. Shares are flat and need a catalyst, possibly on Aug. 7 with earnings. Their oncology platform is also doing well. He expects their revenues to double by 2030, based on 25-30% compounded growth.

WATCH

It reports Thursday. Is concerned, given recent awful numbers reported by its GLP-1 competitor, Novo Nordisk. Is LLY taking market share? Are these companies are staying at peak with these drugs? He thinks a little of both. He sold a few shares to take a huge gain.

BUY

Stock collapsed today on good news from NVO trials. Lots of drugs in pipeline for dementia and other illnesses. Step up and buy some more today. Today's drop is just a knee-jerk reaction.

PAST TOP PICK

(A Top Pick Sep 24/24, Down 31%)

A lot of the move down happened this week. Numbers were good -- earnings and revenue beat, guidance was good. Market really homed in on obesity pill disappointment (slightly less efficacy than a competitor's, 10% dropped out due to side effects). Now trades at 24x PE, with 19% growth.

Very cheap, but sentiment has become difficult and challenging. Long term, the demand for diabetes and obesity drugs is still there and will continue to grow. Industry-leading Alzheimer's drug in pipeline as well. Fortress-like balance sheet, really great cashflow.

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Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK

(A Top Pick Jun 12/25, Down 13.4%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with LLY has triggered its stop at $703. To remain disciplined, we recommend covering the position at this time.

HOLD

There was a lot of hype in the weight-loss drugs, typical for a new drug (or technology). This and Novo Nordisk have recently fallen. The future asks, How will they monetize the GLP-1 franchise? An oral application, which will happen in time. Many moving parts in this industry. LLY's PE has fallen from 50x to 35x. Is a hold depending on your overall portfolio and other factors.

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