22-05-2025
We're adding to our position in this out-of-favor, high-quality drugmaker stock
We are buying 10 shares of Eli Lilly at roughly $715. Following the trade, Jim Cramer's Charitable Trust will own 125 shares of LLY, increasing its weighting to 2.65% from about 2.45%. Since the start of May, Eli Lilly shares have fallen roughly 20% on concerns about possible tariffs on overseas manufacturing, an executive order targeting lower drug prices, and worries that Novo Nordisk was starting a GLP-1 pricing war after it announced an agreement with CVS Health's Caremark to make Wegovy the preferred GLP-1 weight loss medication on its formulary. Eli Lilly, and other health-care stocks, have also fallen behind the rest of the market due to a rotation back into more economically sensitive names after the United States and China mutually agreed to reduce tariffs for 90 days. We are mindful of these risks to pharmaceutical companies. Still, we would not be surprised to see the industry work with the Trump administration to find a compromise that is suitable for all parties. And with Eli Lilly shares trading at a 52-week low and only 24 times its estimated 2026 earnings per share, a lot of these headwinds have already been priced in. As for competition, patients should continue to prefer Zepbound because of its superiority over Wegovy. At Eli Lilly's current price of about $715 per share, the stock has entirely erased a 14% move in mid-April when the company announced its daily obesity pill was successful in a late stage trial for Type 2 diabetes with no safety and tolerability concerns. The positive data had significant implications for the GLP-1 market, setting up Lilly to release a medication that offers Wegovy-like efficacy to patients who suffer from needle fear. Oral GLP-1 medications are easier to scale in manufacturing and offer greater convenience for shipping and storage compared to injectable versions. Come next year, the company will have the best injectable and oral GLP-1 medications on the market. Combined with its leading manufacturing footprint, we expect Eli Lilly will continue to gain share in the fast-growing GLP-1 market. (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 . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
