Obesity drug giant Eli Lilly on Thursday reported a monster first quarter, fortifying our conviction to stick with the stock after a period of sluggishness. Revenue in the three months ended in March jumped 56% from a year ago to $19.8 billion, trouncing the LSEG consensus of $17.6 billion. Adjusted earnings per share totaled $8.55, more than doubling on an annual basis and crushing the $6.66 consensus, according to LSEG. LLY 1Y mountain Eli Lilly’s stock performance over the past 12 months. Shares surged about 10% on Thursday. The stock came into the day down 21% for the year and roughly 23% off its late November all-time closing high of $1,110. The weakness in the stock was tied to a broader rotation away from the healthcare sector, and broader questions about the competitive dynamics in the booming GLP-1 market. Bottom line Lilly knocked it out of the park. As if the massive top and bottom-line beats were not enough, the drugmaker raised its full-year guidance for revenue, operating profitability and earnings per share. “This is one of the greatest pharma stories,” Jim Cramer said Thursday. A big reason why Lilly’s results are so impressive: It’s doing this despite weaker realized drug prices in the U.S., partially stemming from most favored nation agreements with the Trump administration in exchange for Medicare access. Competition from Novo Nordisk , the maker of Ozempic for diabetes and Wegovy for weight loss, is another factor. Regardless, Eli Lilly CEO David Ricks has insisted his company will be able to overcome lower prices with higher volumes — and that’s what is happening. In the first quarter, pricing fell 7% in the U.S., but volumes jumped 49% driven by its injectable GLP-1s, Zepbound for obesity and Mounjaro for type 2 diabetes. (Both drugs share the active ingredient of tirzepatide.) The dynamic was actually even more pronounced on a worldwide basis, with pricing down 13% and volumes up 65%. China was a big driver of the weaker prices globally. Mounjaro fueled the volumes gains internationally, where it is marketed for both obesity and diabetes. The international strength of Mounjaro has been a standout theme recently, and that was the case again in the first quarter. For the full year, Lilly still expects pricing to be a low-to-mid teens headwind on a percentage basis. So, the fact Lilly is taking up its guidance just one quarter into the year is anyways a clearly bullish signal. All the billions upon billions of dollars that Lilly has poured into expanding GLP-1 manufacturing capacity in recent years is paying off. Demand is strong, the GLP-1 market is growing, and Lilly has the supply to meet the moment. Another big topic Thursday had nothing to do with the reported figures: the launch of obesity pill Foundayo, which secured its long-awaited Food and Drug Administration approval on April 1 and became broadly available about a week later. Foundayo used to be referred to by the name of its active ingredient, orforglipron. Investors wanted clarity on early prescription data that showed Foundayo was off to a sluggish start compared to the launch of Novo’s Wegovy pill in January. That revelation hurt the stock last week. During a CNBC interview Thursday morning, Ricks had reassuring things to say here, stressing that his long-term optimism hasn’t dimmed. He conceded Novo’s pill had an advantage of leveraging the existing Wegovy brand. By contrast, the Foundayo brand is being built from scratch, and it will take time to familiarize both doctors and consumers. Lilly hasn’t started advertising on TV yet, Ricks said, so most of the demand for the product is coming organically. More than 20,000 people are taking the pill, he said. Plus, a key stat: about 80% of the Foundayo prescriptions are for people who previously weren’t taking a GLP-1. This supports the idea the convenience of a pill would expand the size of the obesity market, not cannibalize the injectables. The ramp will play out over quarters, not days, Ricks argued. It’s hard to disagree with him. Something to monitor going forward is the start of Medicare coverage for obesity drugs with a $50 copay. The start of a pilot program has been delayed due to private insurers’ reluctance to participate for their Part D prescription plans. In response, the Trump administration plans to extend a bridge program by a year through the end of 2027. So, Lilly will be able to benefit from this bridge program. We just need to keep watch of the longer-term discussion to ensure the Part D coverage is in place for 2028. Ricks said he believes the broader health benefits for patients will become apparent over the next 18 months. “I would expect the government to lean hard into getting Part D plan participation and normalizing obesity care as a standard preventative treatment and something that should be used to treat comorbidities of obesity within the senior population,” Ricks said on the earnings call. “We may have the evidence to support that as we exit ’27.” Why we own it Eli Lilly’s best-in-class drugs should enable growth above the industry average for many years to come. The portfolio is anchored by its GLP-1 franchise, which currently includes Mounjaro for type 2 diabetes and Zepbound for obesity injectables, as well as a new weight loss pill, Foundayo. The fast-growing class of drugs has the potential to treat other conditions. Competitors: Novo Nordisk , Biogen , Eisai, Merck and Pfizer Weight in portfolio: 2.26% Most recent buy: May 22, 2025 Initiated: Oct. 8, 2021 Finally, Lilly executives remained upbeat on Lilly’s GLP-1 drug pipeline, including retatrutide, which trials show delivers even more weight loss on average than Zepbound. The company plans to file for regulatory approval in the U.S. later this year. On the call, executives said retatrutide could be an especially helpful product for type 2 diabetes patients who need help with blood-sugar control and weight loss. The current GLP-1s on the market have generally been less effective in generating weight loss in the diabetes population, so there’s a need that retatrutide could fill. There’s so much to like with Lilly, and we’re glad Wall Street is taking notice Thursday. For now, we’re reiterating our hold-equivalent 2 rating . To account for the market’s disdain for healthcare stocks, we’re lowering our price target to $1,200 a share from $1,250. Guidance Here’s an updated look at Lilly’s full-year 2026 guidance: Revenue in the range of $82 billion to $85 billion, up from $80 billion to $83 billion previously. The new midpoint of $83.5 billion is ahead of the FactSet consensus of $82.1 billion. Performance margin, a Lilly-defined measure of operating profitability, in the range of 47% to 48.5%, up from 46% to 47.5%. Earnings per share in the range $35.50 to $37, an increase from the prior $33.50 to $35. The revised midpoint of $36.25 tops the FactSet consensus of $34.52. (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. 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