Eli Lilly Stock Surges on Demand for Weight-Loss Drugs

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Eli Lilly (LLY) stock is rallying more than 5% in Thursday's session after the pharmaceutical giant reported strong first-quarter earnings results and raised its full-year outlook.

In the three months ended March 31, Eli Lilly's revenue increased 26% from the year-ago period to $8.8 billion. Earnings per share (EPS) surged 59.3% to $2.58.

"Lilly's first-quarter performance reflects solid year-over-year revenue growth with strong sales of [weight-loss drugs] Mounjaro and Zepbound," Eli Lilly CEO David A. Ricks said in a statement. "Our progress in addressing some of the world's most significant healthcare challenges has resulted in increased demand for our medicines."

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The Q1 results were mixed compared with analysts' expectations, which called for revenue of $8.9 billion and EPS of $2.46, according to Yahoo Finance.

Still, Eli Lilly's weaker-than-expected revenue was quickly overlooked after the company increased its full-year outlook. The drugmaker now expects full-year revenue in the range of $42.4 billion to $43.6 billion and earnings to arrive between $13.50 to $14.00 per share. This is up from LLY's previous outlook for revenue in the range of $40.4 billion to $41.6 billion and earnings of $12.20 to $12.70 per share.

"As we continue to make pipeline investments that position us for future growth, we are rapidly expanding manufacturing capacity to make our incretin medicines available to more patients," Ricks said.

Where does Eli Lilly stock stand with analysts?

Analysts were already bullish on the healthcare stock ahead of earnings. According to S&P Global Market Intelligence, the consensus analyst target price for LLY shares is $813.32, representing an upside of just over 5% to current levels. Meanwhile, the consensus recommendation is a Buy.

However, Damien Conover, director of equity strategy at Morningstar, believes Eli Lilly stock was running a little hot ahead of earnings.

"With its 2-star rating, we believe Eli Lilly's stock is overvalued compared with our long-term fair value estimate of $500," Conover said. The $500 estimate represents a downside of more than 35% to current levels.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.