Eli Lilly (NYSE:LLY) delivered a quarter that forced Wall Street to catch up to its own numbers. On August 5, the company reported second-quarter revenue of $23.0 billion, up 48% from a year earlier, and used the momentum to raise its full-year sales and profit targets. Shares moved higher the same day as investors focused on how fast the obesity franchise is still expanding.
Bull Case: Weight Loss Demand Still Has Room To Run
The headline number came from Mounjaro and Zepbound. Mounjaro revenue jumped 91% to $9.9 billion, while Zepbound climbed 46% to $4.9 billion, and together they anchored a quarter where US sales rose 33% to $14.4 billion, and international sales rose 80% to $8.6 billion. Growth was not confined to the diabetes and obesity lineup either. Lilly’s immunology, oncology, and neuroscience products grew a combined 121%, showing the newer parts of the portfolio are starting to contribute in a real way.
Management responded by lifting full-year revenue guidance to a range of $85 billion to $87 billion, up from $82 billion to $85 billion previously. Lilly is also plowing the cash back into its pipeline, closing acquisitions of Orna Therapeutics, Ajax Therapeutics, Centessa Pharmaceuticals, and Kelonia Therapeutics during the quarter, agreeing to buy AtaiBeckley afterward, and committing another $4.5 billion to expand manufacturing in Indiana. On the drug development side, three more Phase 3 trials of the experimental triple agonist retatrutide read out positively, giving Lilly a complete data package to support a planned obesity application submission in the first quarter of 2027.
Bear Case: The Cost Of Growing This Fast
The same quarter that produced 48% revenue growth also showed what that growth is costing. Realized prices fell 13% company-wide, with international pricing down 36% largely tied to Mounjaro’s addition to China’s national reimbursement drug list, a trade-off Lilly is making for volume and market access. The acquisition spree carried a real accounting price tag too. Acquired R&D charges hit $2.8 billion in the quarter, versus just $154 million a year earlier, which is why reported EPS grew only 26% even as the non-GAAP figure grew 33%.
Asset impairment and restructuring charges of $703 million, largely tied to the Kelonia and Centessa deals, added further drag, and the effective tax rate climbed to 23.3% from 16.5% because of the non-deductible nature of those charges. R&D spending rose 14% to $3.8 billion, and marketing and administrative costs rose 25% to $3.4 billion, a reminder that funding a pipeline this active and prepping for a wave of new launches is not cheap. None of this changes the underlying growth story, but it does mean the path from strong sales to clean reported profit is getting bumpier as the deal-making continues.
What The Smart Money Is Watching
Hedge fund ownership slipped from 137 funds to 132 last quarter, a modest pullback rather than a rush for the exits. Short interest sits at just 1.15% of float, about as low as it gets, showing almost no organized bet against the stock. The forward price-to-earnings ratio of 32.89 puts Lilly well above the broader market, pricing in continued double-digit growth from here.
The Question Still On The Table
Lilly’s quarter proved the obesity franchise still has room to grow and that the rest of the portfolio is starting to pull its own weight. For the growth case to keep holding, retatrutide and the newer acquisitions need to convert clinical progress into approved, revenue-generating products on schedule. For skeptics, the falling realized prices and the rising tax and integration costs from an aggressive deal pace are the numbers to watch next.
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