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ETFs to Buy as Mounjaro Powers Eli Lilly's Q4 Earnings Beat
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Eli Lilly and Company (LLY - Free Report) posted robust fourth-quarter 2023 earnings, beating estimates on both the top and bottom lines. Strong sales of its diabetes and weight-loss treatments continued to offset a slump in revenues for its legacy diabetes drug Trulicity. The pharmaceutical giant issued a sound outlook for 2024.
Following the earnings beat, the stock jumped as much as 5.1% initially but eventually fell and closed the day down 0.2%. 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) , Harbor Health Care ETF (MEDI - Free Report) and Health Care Select Sector SPDR Fund (XLV - Free Report) .
Earnings in Focus
Earnings per share came in at $2.49, surpassing the Zacks Consensus Estimate of $2.46 and improving 19% from the year-ago earnings. Revenues rose 28% to $9.3 billion and edged past the estimate of $8.9 billion. The robust results were driven by strong sales of Mounjaro, Zepbound, Verzenio and Jardiance (see: all the Healthcare ETFs here).
Mounjaro's sales jumped to $2.21 billion from just $279.2 million in the year-ago quarter, while Verzenio's sales jumped 42% to $1.1 billion. Sales of Jardiance increased 30% year over year and Tyvyt soared 98%. Zepbound, a new version of Mounjaro, raked in about $176 million in sales during the final weeks of the fourth quarter after it won FDA approval in early November. Three other drugs — Olumiant, Taltz, and Retevmo — generated double-digit percentage sales growth in the fourth quarter.
Eli Lilly expects revenue growth to accelerate in the second half of the year, given solid demand for Mounjaro and Zepbound. Analysts estimate the new weight-loss counterpart Zepbound to make more than a billion dollars in sales in its first year on the market and eventually, become the biggest drug of all time.
The pharma giant provided 2024 outlook. It expects revenue in the range of $40.4-$41.6 billion and earnings per share of $12.20-$12.70. The Zacks Consensus Estimate is pegged at $39.60 billion for revenues and $12.50 for earnings per share.
iShares U.S. Pharmaceuticals ETF provides exposure to 32 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 24.4% share.
iShares U.S. Pharmaceuticals ETF has $639.3 million in AUM and charges 40 bps in fees and expenses. Volume is lower as it exchanges about 17,000 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 37 stocks in its basket, with Eli Lilly taking the top spot at 13.7% of the portfolio.
Horizon Kinetics Medical ETF has gathered $17 million in its asset base and charges 85 bps in annual fees. It trades in an average daily volume of 600 shares.
iShares U.S. Healthcare ETF offers exposure to 115 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 10.9% of the total assets. In terms of industrial exposure, pharma takes the top spot at 30.9%, followed by healthcare equipment (19.9%) and biotech (18%).
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 57,000 shares a day and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Healthcare ETFs Start 2024 on a Positive Note).
Harbor Health Care ETF is actively managed by Westfield Capital and primarily invests in the securities of companies principally engaged in the research, development, production or distribution of products and services related to the healthcare industry. MEDI has a concentrated portfolio of 35 companies that Westfield believes are best positioned to benefit from the secular growth and innovation within the U.S. healthcare system with long-term alpha potential. Eli Lilly occupies the fourth position with a 9% share.
Harbor Health Care ETF has accumulated $6.8 million in its asset base while trading in an average daily volume of 500 shares. It charges 80 bps in annual fees.
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 10.6% of the assets. Pharma and healthcare providers and services take the largest share at 30.7% and 21.3% share, respectively. Healthcare equipment and supplies, biotech, and life sciences tools & services also have double-digit exposure each (read: Forget Rate Cuts, Buy Top-Ranked Sector ETFs).
Health Care Select Sector SPDR Fund manages $35.7 billion in its asset base and trades in a heavy volume of around 9.6 million shares. The expense ratio comes in at 0.09%. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
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ETFs to Buy as Mounjaro Powers Eli Lilly's Q4 Earnings Beat
Eli Lilly and Company (LLY - Free Report) posted robust fourth-quarter 2023 earnings, beating estimates on both the top and bottom lines. Strong sales of its diabetes and weight-loss treatments continued to offset a slump in revenues for its legacy diabetes drug Trulicity. The pharmaceutical giant issued a sound outlook for 2024.
Following the earnings beat, the stock jumped as much as 5.1% initially but eventually fell and closed the day down 0.2%. 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) , Harbor Health Care ETF (MEDI - Free Report) and Health Care Select Sector SPDR Fund (XLV - Free Report) .
Earnings in Focus
Earnings per share came in at $2.49, surpassing the Zacks Consensus Estimate of $2.46 and improving 19% from the year-ago earnings. Revenues rose 28% to $9.3 billion and edged past the estimate of $8.9 billion. The robust results were driven by strong sales of Mounjaro, Zepbound, Verzenio and Jardiance (see: all the Healthcare ETFs here).
Mounjaro's sales jumped to $2.21 billion from just $279.2 million in the year-ago quarter, while Verzenio's sales jumped 42% to $1.1 billion. Sales of Jardiance increased 30% year over year and Tyvyt soared 98%. Zepbound, a new version of Mounjaro, raked in about $176 million in sales during the final weeks of the fourth quarter after it won FDA approval in early November. Three other drugs — Olumiant, Taltz, and Retevmo — generated double-digit percentage sales growth in the fourth quarter.
Eli Lilly expects revenue growth to accelerate in the second half of the year, given solid demand for Mounjaro and Zepbound. Analysts estimate the new weight-loss counterpart Zepbound to make more than a billion dollars in sales in its first year on the market and eventually, become the biggest drug of all time.
The pharma giant provided 2024 outlook. It expects revenue in the range of $40.4-$41.6 billion and earnings per share of $12.20-$12.70. The Zacks Consensus Estimate is pegged at $39.60 billion for revenues and $12.50 for earnings per share.
ETFs to Tap
iShares U.S. Pharmaceuticals ETF (IHE - Free Report)
iShares U.S. Pharmaceuticals ETF provides exposure to 32 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 24.4% share.
iShares U.S. Pharmaceuticals ETF has $639.3 million in AUM and charges 40 bps in fees and expenses. Volume is lower as it exchanges about 17,000 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 37 stocks in its basket, with Eli Lilly taking the top spot at 13.7% of the portfolio.
Horizon Kinetics Medical ETF has gathered $17 million in its asset base and charges 85 bps in annual fees. It trades in an average daily volume of 600 shares.
iShares U.S. Healthcare ETF (IYH - Free Report)
iShares U.S. Healthcare ETF offers exposure to 115 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 10.9% of the total assets. In terms of industrial exposure, pharma takes the top spot at 30.9%, followed by healthcare equipment (19.9%) and biotech (18%).
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 57,000 shares a day and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Healthcare ETFs Start 2024 on a Positive Note).
Harbor Health Care ETF (MEDI - Free Report)
Harbor Health Care ETF is actively managed by Westfield Capital and primarily invests in the securities of companies principally engaged in the research, development, production or distribution of products and services related to the healthcare industry. MEDI has a
concentrated portfolio of 35 companies that Westfield believes are best positioned to benefit from the secular growth and innovation within the U.S. healthcare system with long-term alpha potential. Eli Lilly occupies the fourth position with a 9% share.
Harbor Health Care ETF has accumulated $6.8 million in its asset base while trading in an average daily volume of 500 shares. It charges 80 bps in annual fees.
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 10.6% of the assets. Pharma and healthcare providers and services take the largest share at 30.7% and 21.3% share, respectively. Healthcare equipment and supplies, biotech, and life sciences tools & services also have double-digit exposure each (read: Forget Rate Cuts, Buy Top-Ranked Sector ETFs).
Health Care Select Sector SPDR Fund manages $35.7 billion in its asset base and trades in a heavy volume of around 9.6 million shares. The expense ratio comes in at 0.09%. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.