Eli Lilly stock tumbled Tuesday after updated financial guidance disappointed investors. Jim Cramer says the dip is a buying opportunity. The pharmaceutical giant lowered its 2024 revenue outlook due to a weaker-than-expected fourth quarter for its all-important GLP-1 drugs used for weight loss and diabetes. Eli Lilly said fourth-quarter sales should now be around $13.5 billion, missing Wall Street estimates of $13.9 billion, according to FactSet. That’s approximately $400 million below the low end of guidance management issued during the October quarter. Shares sank more than 7% Tuesday as a result. Jim said members should utilize the slump to buy shares of a quality company at a better price. “2024 is already in the history books,” Jim said. “It doesn’t matter to the stock…I think you have to be on the horse that is Eli Lilly.” The shortfall stems from its popular weight-loss treatment Zepbound and type-2 diabetes drug Mounjaro, adding to the disappointment. Lilly said Zepbound and Mounjaro’s fourth-quarter sales are expected to be $1.9 billion and $3.5 billion, respectively, missing estimates of $2.1 billion and $4.4 billion, according to FactSet. Prior guidance assumed faster growth than what was realized in the three months ended Dec. 31. Zepbound and Mounjaro, which share an active ingredient called tirzepatide, are part of the booming class of GLP-1 drugs. The drugs mimic the naturally occurring GLP-1 hormone to help regulate blood sugar and suppress appetite, leading to weight loss. Eli Lilly and Danish rival Novo Nordisk , which makes Wegovy for weight loss and Ozempic for diabetes, currently dominate the GLP-1 space. Some on Wall Street see the GLP-1 market being worth at least $100 billion annually by the end of the decade. Jim has long said tirzepatide could become the best-selling drug of all time. “Let the uninformed people sell” shares of Eli Lilly on Tuesday’s news, Jim said. “Look at the size of the market…We’re in its infancy, and its infancy is already so much bigger than any drug I’ve ever seen.” LLY YTD mountain Eli Lilly (LLY) year-to-date performance We most recently added to our Eli Lilly position in late November , a few weeks after we upgraded the stock to our buy-equivalent 1 rating on the back of softer-than-expected third-quarter earnings. In September, we made a small sale of Eli Lilly out of discipline, booking a nearly 300% profit on the trade . The Club is currently restricted from trading Eli Lilly because Jim has mentioned the stock on CNBC within the past 72 hours. But for members, it’s worth buying more shares because nothing in Tuesday’s update suggests the long-term growth opportunity for GLP-1 drugs has diminished. In fact, Eli Lilly said Tuesday it expects sales in the range of $58 billion to $61 billion in fiscal year 2025. The midpoint of $59.5 billion beats analysts expectations of $58.4 billion. The company will provide full 2025 guidance on Feb. 6 alongside its complete fourth-quarter results. Eli Lilly’s update Tuesday coincided with the influential JPMorgan Healthcare Conference in San Francisco. It’s common for companies to make tweaks to their guidance and announce deals during the event. After the close Tuesday, Lilly CEO David Ricks is set to participate in a “fireside chat” at the conference. In an interview on CNBC on Tuesday morning, Ricks told Jim that the GLP-1 market’s “underlying fundamentals are incredible.” He added, “The total GLP-1 market last year grew 45%. We grew 60%, and we grew share in the fourth quarter.” Eli Lilly provided another reason to be upbeat on company’s long-term health earlier this week. CEO Ricks told Bloomberg Monday that he expects weight-loss pill orforglipron to be approved in early 2026. Zepbound and Mounjaro are once-weekly injections. Investors see a lot of potential in obesity pills because of their convenience, both for patients taking the drugs and on the manufacturing side. Bottlenecks involving the auto-injector pens used to administer Zepbound and Mounjaro in the U.S. played a major role in the supply shortages for those medications. Eli Lilly has invested billions of dollars to alleviate those shortages, and the company noted Tuesday that all doses of Zepbound and Mounjaro were available in the fourth quarter. In a note to clients Tuesday, analysts at Leerink Partners reiterated their buy-equivalent rating on Eli Lilly shares, saying that the potential for encouraging trials results on orforglipron later this year should help support the stock. (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. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Beata Zawrzel | Nurphoto | Getty Images