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Pharmaceutical giant Eli Lilly (LLY) is doing its best NVIDIA (NVDA) impression, crushing Q2 EPS and revenue estimates and significantly raising its FY24 guidance. While huge beat-and-raise performances are not foreign to the tech sector, they are, however, very rare for well-established companies in the healthcare sector, making LLY's blowout results and guidance look all the more impressive. Unsurprisingly, robust demand for LLY's GLP-1 diabetes and weight loss drugs, Mounjaro and Zepbound, were the primary catalysts.

• Heading into LLY's Q2 earnings report, there was some concern that supply constraints for those two blockbuster drugs would prevent the company from meeting investors' heightened expectations. Those concerns were ratcheted higher after competitor Novo Nordisk (NVO) posted disappointing Q2 results yesterday as sales of its GLP-1 diabetes and weight loss drugs, Ozempic and Wegovy, came up short of estimates.
  • Wegovy sales still jumped by 55% to $1.7 bln and Ozempic sales increased by 26% to $4.2 bln, but sales would have been ever stronger if not for supply shortages.
• During a CNBC interview earlier this morning, LLY CEO David Ricks stated that, unlike NVO, it is not constrained by supply. That certainly showed in the Q2 results with sales of Mounjaro soaring by 214% to $3.09 bln and sales of Zepbound hitting $1.2 bln -- both of which topped analysts' estimates.
• The one clear blemish for LLY was the 31% drop in Trulicity revenue to $1.25 bln. Rising competition, including from its own Mounjaro diabetes drug, is hurting demand for Trulicity. However, that's a price that LLY is willing to pay as the breakout success of Mounjaro gives the company its strongest growth catalyst in years, if not decades.
• Looking ahead, there doesn't appear to be any slowdown in sight based on LLY's updated FY24 guidance. After raising its EPS and revenue outlook when it reported Q1 results on April 30, LLY again lifted its guidance -- this time by an even greater amount. Specifically, the company is now forecasting EPS of $16.10-$16.60, up from its prior guidance of $13.50-$14.00, and revenue of $45.4-$46.6 bln, up from $42.4-$43.6 bln.

The main takeaway is that concerns surrounding supply constraints or worries that the GLP-1 bubble has burst, were wiped away with LLY's spectacular Q2 earnings report. Additionally, LLY demonstrated stronger execution than competitor NVO, likely leading to more capital flowing into LLY shares from NVO.