On September 3, a caller asked whether to rotate out of artificial intelligence stocks and add to Eli Lilly and Company (NYSE:LLY) rather than chase Johnson & Johnson (NYSE:JNJ) or Cardinal Health (NYSE:CAH). Mad Money host Jim Cramer said:
Well, I’ll tell you… I think it’s always good to look at Lilly as a stock that I think has a lot of things that are going well, but I want to wait. Well, actually, you know, tell you the truth… It’s pulled back. I think you’re fine, I think you’re fine to add some. I’m going to okay that. And I understand JNJ’s moved a great deal. It’s been a great club hit and Cardinal has been terrific, too. So, thank you for referencing those two really good ones.
Cramer was also asked to rank J&J, Lilly, and Pfizer Inc. (NYSE:PFE) by another caller. He said:
Okay, so let’s take them. J&J is best of breed, AAA balance sheet, 18 drugs… You’re not going to have any expiration problems, okay? Lilly has one huge drug that we know is going to be a franchise for many, many years. I do like a diversifying pattern more. And Pfizer’s starting to creep up and is playing catch-up, but I need a reason to recommend it. So I’m going to say J&J and Lilly and then Pfizer.
Lilly Leads on Growth, While J&J Offers Diversification
The latest results largely explain the differences in Cramer’s ranking. Eli Lilly and Company has the strongest growth profile by a wide margin. Second-quarter revenue jumped 48% to $23 billion, while reported EPS increased 26% to $7.94 and non-GAAP EPS rose 33% to $8.38. Mounjaro revenue rose 91% to $9.9 billion, while US Zepbound revenue increased 44% to $4.9 billion. The company also raised its 2026 revenue guidance to $85 billion-$87 billion.
Johnson & Johnson’s growth is much slower, but the business is considerably more diversified. Second-quarter sales increased 6.6% to $25.3 billion, while adjusted EPS rose 4.7% to $2.90. The company raised its 2026 adjusted EPS guidance to $11.68 at the midpoint.
The valuation gap is narrower than the growth gap. Eli Lilly’s forward P/E was 24.57, compared with 21.74 for J&J in early September. Investors are therefore paying more for Eli Lilly’s faster growth, while J&J offers a broader earnings base at a lower multiple.
Furthermore, Cardinal Health offers a lower valuation alongside strong earnings growth. Fiscal 2026 revenue increased 14% to $254.2 billion, while non-GAAP diluted EPS rose 37% to $11.26. The company guided to FY2027 non-GAAP diluted EPS of $12.40-$12.60, which represents 13%-15% growth from its adjusted FY2026 EPS base of $10.95. Its forward P/E was 19.76.
Pfizer Inc. is the clear value outlier. Second-quarter revenue increased 3% year-over-year to $15 billion, and the company raised the midpoint of its 2026 revenue guidance by $500 million to $61.5 billion. The new guidance shows better-than-expected performance from non-COVID products, although the company expects about $4 billion of COVID-related revenue this year. At a forward P/E of just 9.88, it trades at less than half Eli Lilly’s multiple and well below J&J and Cardinal. That discount points to the uncertainty surrounding patent losses and the company’s ability to replace declining COVID-related revenue with newer products.
If we put it all together, the numbers show four different investment cases: Eli Lilly offers the strongest growth, J&J provides the broadest earnings base, Cardinal has the strong earnings momentum, and Pfizer has the lowest valuation.
Bear Case is Different for Each Stock
Eli Lilly and Company’s biggest risk is the high level of expectations already reflected in its valuation. Continued growth from Mounjaro and Zepbound is important to the investment case, which leaves the stock more exposed to a slowdown in demand, pricing pressure, or stronger competition. Meanwhile, Johnson & Johnson’s slower growth makes execution and continued pipeline contributions more important. Its diversified business reduces reliance on any single drug, but the company still needs newer products to offset declines elsewhere.
As for Cardinal Health, its strong earnings growth also sets a higher bar. The company’s fiscal 2026 results benefited from a tariff refund, which makes the underlying growth rate important when investors assess the sustainability of the fiscal 2027 outlook. Lastly, Pfizer Inc. has the opposite problem. Its valuation is low, but the discount points to concerns over loss of exclusivity and the pace at which its newer products can replace declining revenue.
Hedge Funds Favor Lilly More Strongly
Institutional positioning also separates the four stocks. According to Insider Monkey, 152 hedge funds held LLY in the second quarter, up from 132 in the first quarter. JNJ rose to 117 holders from 113, while CAH fell to 63 from 66. Lastly, PFE was unchanged at 83. Short interest does not point to an unusually crowded bearish trade in any of the four stocks, as Eli Lilly had roughly 0.7%-0.8% of its float sold short, while J&J was around 0.9%. Cardinal had the highest level at approximately 2.7%-2.8%, followed by Pfizer at roughly 2.6%-2.7%.
Cramer’s preference for Johnson & Johnson over Eli Lilly and Company comes down to diversification, while he was willing to add LLY after its pullback and said its key drug could remain a franchise for many years. The financial results support that distinction. Eli Lilly is growing at a rate that the other three might not be able to match, but it also carries the highest forward P/E. J&J offers slower growth at a lower multiple, Cardinal Health combines strong earnings growth with a sub-20 forward P/E, and Pfizer Inc. has the lowest forward P/E but carries the greatest uncertainty around its earnings outlook. For investors moving money from AI into healthcare, the choice is therefore less about finding one universally superior stock and more about the trade-off between growth, diversification, earnings momentum, and valuation.
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