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ETFs to Buy as Eli Lilly Beats Q1 Earnings, Lifts Outlook
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Eli Lilly and Company (LLY - Free Report) posted mixed first-quarter 2024 earnings, beating earnings estimates but lagging on revenues. The pharmaceutical giant raised its outlook for 2024 on rapidly climbing sales of the new obesity drug Zepbound and its counterpart for diabetes, Mounjaro.
The stock jumped 6% in response to the earnings beat. Investors seeking to tap the opportune moment could bet on ETFs having the largest exposure to the drugmaker. These include iShares U.S. Pharmaceuticals ETF (IHE - Free Report) , Horizon Kinetics Medical ETF (MEDX - Free Report) , iShares U.S. Healthcare ETF (IYH - Free Report) , Health Care Select Sector SPDR Fund (XLV - Free Report) and VanEck Vectors Pharmaceutical ETF (PPH - Free Report) .
Earnings in Focus
Earnings per share came in at $2.58, surpassing the Zacks Consensus Estimate of $2.53 and improving 59% from the year-ago number. Revenues rose 26% to $8.77 billion but fell short of the estimated $8.81 billion. The year-over-year sales growth was driven by strong sales of Mounjaro, Zepbound, Verzenio and Jardiance (see: all the Healthcare ETFs here).
Mounjaro's sales jumped to $1.81 billion from just $568.5 million in the year-ago quarter, while Verzenio and Jardiance sales soared 40% and 19% year over year, respectively. Zepbound, launched in the United States in November, raked in about $517.4 million in sales during the quarter. Two other drugs — Taltz and Humalog — generated double-digit sales growth while Trulicity slumped 26% year over year.
Eli Lilly raised 2024 revenue guidance to $42.4-$43.6 billion from $40.4-$41.6 billion, driven by tremendous sales growth for Mounjaro and Zepbound. Adjusted earnings per share was upped to $13.50-$14.00 from prior projections of $12.20-$12.70. The Zacks Consensus Estimate is pegged at $41.29 billion for revenues and $12.51 for earnings per share.
iShares U.S. Pharmaceuticals ETF offers exposure to 34 companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. Of these, Eli Lilly takes the top spot, accounting for a 22.8% share (read: Time to Tap Healthcare ETFs on Nvidia's AI Ambition?).
iShares U.S. Pharmaceuticals ETF has $642.6 million in AUM and charges 40 bps in fees and expenses. Volume is lower as it exchanges about 58,000 shares a day. The fund has a Zacks ETF Rank #2 (Buy) with a High risk outlook.
Horizon Kinetics Medical ETF is an actively managed ETF that invests primarily in patented first-line pharmaceuticals and biologics, as these products tend to have high profit margins and significant barriers to entry. It holds 38 stocks in its basket, with Eli Lilly taking the top spot at 15% of the portfolio.
Horizon Kinetics Medical ETF has gathered $16 million in its asset base and charges 85 bps in annual fees. It trades in an average daily volume of 1000 shares.
iShares U.S. Healthcare ETF offers exposure to 113 U.S. healthcare equipment and services, pharmaceuticals, and biotechnology companies by tracking the Russell 1000 Health Care RIC 22.5/45 Capped Gross Index. Here, Eli Lilly is the top firm, accounting for 11.6% of the total assets. In terms of industrial exposure, pharma takes the top spot at 31.1%, followed by healthcare equipment (20.2%) and biotech (16.8%).
iShares U.S. Healthcare ETF has amassed $3.3 billion in its asset base and charges 40 bps in annual fees. It trades in a moderate volume of around 347,000 shares a day and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Will Healthcare ETFs Lose Momentum as Q1 Earnings Unfold?).
Health Care Select Sector SPDR Fund is the most popular healthcare ETF and follows the Health Care Select Sector Index. It holds 64 securities in its basket, with LLY occupying the top position at 11.3% of the assets. Pharma and healthcare providers and services take the largest share at 30.9% and 21.6% share, respectively. Healthcare equipment and supplies, biotech, and life sciences tools & services also have double-digit exposure each.
Health Care Select Sector SPDR Fund manages $37.8 billion in its asset base and trades in a heavy volume of around 8.6 million shares. The expense ratio comes in at 0.09%. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
VanEck Vectors Pharmaceutical ETF follows the MVIS US Listed Pharmaceutical 25 Index, which measures the performance of companies involved in pharmaceuticals, including pharmaceutical research and development as well as production, marketing and sales of pharmaceuticals. It holds 26 stocks in its basket, with Eli Lilly occupying the top position at 11.6% of assets.
VanEck Vectors Pharmaceutical ETF has amassed $515.3 million in its asset base and trades in a good volume of about 125,000 shares a day. The expense ratio is 0.36%. VanEck Vectors Pharmaceutical ETF has a Zacks ETF Rank #3 with a Medium risk outlook.
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ETFs to Buy as Eli Lilly Beats Q1 Earnings, Lifts Outlook
Eli Lilly and Company (LLY - Free Report) posted mixed first-quarter 2024 earnings, beating earnings estimates but lagging on revenues. The pharmaceutical giant raised its outlook for 2024 on rapidly climbing sales of the new obesity drug Zepbound and its counterpart for diabetes, Mounjaro.
The stock jumped 6% in response to the earnings beat. Investors seeking to tap the opportune moment could bet on ETFs having the largest exposure to the drugmaker. These include iShares U.S. Pharmaceuticals ETF (IHE - Free Report) , Horizon Kinetics Medical ETF (MEDX - Free Report) , iShares U.S. Healthcare ETF (IYH - Free Report) , Health Care Select Sector SPDR Fund (XLV - Free Report) and VanEck Vectors Pharmaceutical ETF (PPH - Free Report) .
Earnings in Focus
Earnings per share came in at $2.58, surpassing the Zacks Consensus Estimate of $2.53 and improving 59% from the year-ago number. Revenues rose 26% to $8.77 billion but fell short of the estimated $8.81 billion. The year-over-year sales growth was driven by strong sales of Mounjaro, Zepbound, Verzenio and Jardiance (see: all the Healthcare ETFs here).
Mounjaro's sales jumped to $1.81 billion from just $568.5 million in the year-ago quarter, while Verzenio and Jardiance sales soared 40% and 19% year over year, respectively. Zepbound, launched in the United States in November, raked in about $517.4 million in sales during the quarter. Two other drugs — Taltz and Humalog — generated double-digit sales growth while Trulicity slumped 26% year over year.
Eli Lilly raised 2024 revenue guidance to $42.4-$43.6 billion from $40.4-$41.6 billion, driven by tremendous sales growth for Mounjaro and Zepbound. Adjusted earnings per share was upped to $13.50-$14.00 from prior projections of $12.20-$12.70. The Zacks Consensus Estimate is pegged at $41.29 billion for revenues and $12.51 for earnings per share.
ETFs to Tap
iShares U.S. Pharmaceuticals ETF (IHE - Free Report)
iShares U.S. Pharmaceuticals ETF offers exposure to 34 companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. Of these, Eli Lilly takes the top spot, accounting for a 22.8% share (read: Time to Tap Healthcare ETFs on Nvidia's AI Ambition?).
iShares U.S. Pharmaceuticals ETF has $642.6 million in AUM and charges 40 bps in fees and expenses. Volume is lower as it exchanges about 58,000 shares a day. The fund has a Zacks ETF Rank #2 (Buy) with a High risk outlook.
Horizon Kinetics Medical ETF (MEDX - Free Report)
Horizon Kinetics Medical ETF is an actively managed ETF that invests primarily in patented first-line pharmaceuticals and biologics, as these products tend to have high profit margins and significant barriers to entry. It holds 38 stocks in its basket, with Eli Lilly taking the top spot at 15% of the portfolio.
Horizon Kinetics Medical ETF has gathered $16 million in its asset base and charges 85 bps in annual fees. It trades in an average daily volume of 1000 shares.
iShares U.S. Healthcare ETF (IYH - Free Report)
iShares U.S. Healthcare ETF offers exposure to 113 U.S. healthcare equipment and services, pharmaceuticals, and biotechnology companies by tracking the Russell 1000 Health Care RIC 22.5/45 Capped Gross Index. Here, Eli Lilly is the top firm, accounting for 11.6% of the total assets. In terms of industrial exposure, pharma takes the top spot at 31.1%, followed by healthcare equipment (20.2%) and biotech (16.8%).
iShares U.S. Healthcare ETF has amassed $3.3 billion in its asset base and charges 40 bps in annual fees. It trades in a moderate volume of around 347,000 shares a day and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Will Healthcare ETFs Lose Momentum as Q1 Earnings Unfold?).
Health Care Select Sector SPDR Fund (XLV - Free Report)
Health Care Select Sector SPDR Fund is the most popular healthcare ETF and follows the Health Care Select Sector Index. It holds 64 securities in its basket, with LLY occupying the top position at 11.3% of the assets. Pharma and healthcare providers and services take the largest share at 30.9% and 21.6% share, respectively. Healthcare equipment and supplies, biotech, and life sciences tools & services also have double-digit exposure each.
Health Care Select Sector SPDR Fund manages $37.8 billion in its asset base and trades in a heavy volume of around 8.6 million shares. The expense ratio comes in at 0.09%. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
VanEck Vectors Pharmaceutical ETF (PPH - Free Report)
VanEck Vectors Pharmaceutical ETF follows the MVIS US Listed Pharmaceutical 25 Index, which measures the performance of companies involved in pharmaceuticals, including pharmaceutical research and development as well as production, marketing and sales of pharmaceuticals. It holds 26 stocks in its basket, with Eli Lilly occupying the top position at 11.6% of assets.
VanEck Vectors Pharmaceutical ETF has amassed $515.3 million in its asset base and trades in a good volume of about 125,000 shares a day. The expense ratio is 0.36%. VanEck Vectors Pharmaceutical ETF has a Zacks ETF Rank #3 with a Medium risk outlook.