Issue #136, Volume #2
The Newest Member Of The $1T Club… Pharma Giant Eli Lilly
This is Porter’s Daily Journal, a free e-letter from Porter & Co. that provides unfiltered insights on markets, the economy, and life to help readers become better investors. It includes weekday editions and two weekend editions… and is free to all subscribers.
Editor’s note: Because of the holiday week ahead, we will next publish Porter’s Daily Journal on Monday, December 1 – to give staff and readers time to spend time with family and friends. All of us here at Porter & Co. wish you all a Happy (and tasty) Thanksgiving.
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The trillion-dollar club… Sticking with convictions… Facts first, emotions never… A top-performing Best Buy… A rare entry into High Conviction… Complete Investor’s big weekend… DOGE, RIP… |
Eli Lilly (NYSE: LLY) has joined the $1 trillion club – bringing it into the elite group of companies that have stamped nine zeroes onto their market cap… the first in healthcare to do so.
In June, we recommended shares of the pharmaceutical giant in Complete Investor (still called The Big Secret On Wall Street at the time) at $795 – and they are now up 35%. But it was not a straight path up.
We like Eli Lilly because it is a global leader in the explosive GLP-1 diabetes and weight-loss market. But in August, just weeks after our recommendation, the stock fell 20% after an early setback in the trial for its disruptive weight-loss GLP-1 pill, Orforglipron. That market panic created a rare opportunity to buy a forever stock, whose fundamentals remained rock solid, at a relative valuation low.
Heading into Eli Lilly’s August 7 Q2 earnings call, investors were expecting weight-loss results of at least 15% in its latest Food And Drug Administration (“FDA”) trial. Instead, the FDA’s Phase III data showed 12.4% average weight loss over 72 weeks at the highest dose – a small difference that sparked a big 20% sell-off. But instead of selling along with the market, we leaned in and made Eli Lilly one of our three August Best Buys – the companies among all in the portfolio that are at the most attractive buy point. The results were perfectly solid, we said:
Despite the setback, we believe this is a significant overreaction. Eli Lilly plans to continue moving the drug through its development pipeline, with a launch planned next year, pending regulatory approval.”
That’s often how it goes: when investors are laser-focused on a pivotal drug candidate like Orforglipron, even a small deviation from expectations can trigger panic. And it did. Yet the underlying analysis suggested that once emotions cooled and the data was reviewed objectively, investor nerves would settle. And that’s exactly what happened.
The sell-off in Lilly shares was overdone – and created a rare opportunity to buy Eli Lilly at just 25x next year’s earnings – a valuation not seen since before the GLP-1 boom began. That made it the cheapest entry point since mid 2021, when major competitor Novo Nordisk (NVO) won the first weight-loss approval for a GLP-1 drug, and well before Eli Lilly launched its own blockbuster competitor, Mounjaro, in mid 2022.
We made Eli Lilly a Best Buy on August 14, seven days after the 20% sell-off, at around $680 per share. Since then it has gained 55% in just 102 days.
But we weren’t done yet… After elevating Eli Lilly to Best Buys status in August, we added it to Porter & Co.’s High Conviction portfolio in October – a service exclusively for Partner Pass members which consists of companies we have such strong convictions about that we expect only one or two stocks per year will make it into the portfolio. Shares are up more than 30% since then.
Porter’s been pounding the table on Eli Lilly for months, and we continue to believe this is a forever stock. We plan to hold it indefinitely – and let shares compound.
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Three Things To Know Before We Go…
1. Is a December rate cut back on the table? The odds of a 25-basis-point rate cut being announced at the Federal Reserve’s December 9-10 meeting jumped to 77% today from just 40% last week, according to the CME Group’s FedWatch tool. The move followed comments from Fed Governor Christopher Waller this morning that he is personally advocating for a cut due to notable recent weakness in the labor market.
2. DOGE is gone. Despite eight months remaining on its charter, The Department Of Government Efficiency has been quietly dismantled along with its trillions in promised savings. As we warned, DOGE’s massive savings were never real – they were political marketing dressed up as fiscal reform. After nearly a year of bold claims – and months of Elon Musk ransacking various agencies – the Trump administration has shut down the project with nothing to show for it. Meanwhile, the U.S. government has added $2.1 trillion in new debt since DOGE’s creation. When you’re spending money you don’t have, there’s no limit.
3. Become a complete investor. Over the Thanksgiving weekend, we will roll out the latest features of Porter Stansberry’s Complete Investor – the new name given to our flagship advisory The Big Secret On Wall Street. In addition to being the only place you can get Porter’s current analysis on the market and the economy, Complete Investor offers a monthly stock recommendation, a thorough update of the existing portfolio, the latest Best Buys, and now new features such as “Porter’s How-To Guide To Shorting A Stock” and the monthly Roundtable – a lively and spirited discussion among Porter’s editors and analysts who put together Complete Investor. These features are rolling out this coming weekend… and there will be a new recommendation in December.
To make yourself a complete investor, click here to get access to Complete Investor.
Tell me what you think of today’s Daily Journal or anything else that is on your mind: [email protected]
Porter Stansberry
Stevenson, Maryland
Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current portfolio page of the relevant service, here. To gain access or to learn more about our current portfolios, call Lance James, our Director of Customer Care, at 888-610-8895 or internationally at +1 443-815-4447.