What Eli Lilly’s move to cut prices on Zepbound means for investors
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Market update: Stocks are slightly lower Monday to start December. The market is coming off a strong Thanksgiving week in which the S & P 500 rallied almost 4%, pushing its monthly return into positive territory. It was the seventh straight month of gains for the benchmark gauge. Meanwhile, the Nasdaq jumped over 4% last week, but it wasn’t enough to make up for the index’s poor November performance. The Nasdaq fell 1.5% over the period, ending its seven-month winning streak. Drugmakers cut prices: Eli Lilly said it is lowering the prices of single-dose vials of its obesity medication Zepbound purchased on its health-care platform LillyDirect. For cash-paying patients with a valid prescription, Eli Lilly is offering its starting dose of Zepbound for $299 per month, down from the prior price was $349 per month. Patients needing 5 milligrams of Zepbound can now get it for $399, down from $499 previously. Analysts at Leerink, who upgraded their Eli Lilly rating to outperform in November, said Monday that the price reduction may have come a little earlier than expected, but it shouldn’t be a major surprise. Leerink also said that investors should focus on how these price cuts can help expand patient access to Lilly’s drugs. Meanwhile, peer Novo Nordisk has been cutting prices to recapture lost share in the GLP-1 market. Also, prices were expected to drop around these new levels next year as part of Lilly’s and Novo’s GLP-1 agreement with the Trump Administration. What’s lost in price should be made up for in volume as the costs of these life-changing medicines become more affordable, supporting Eli Lilly’s earnings-per-share growth over the next several years. Club name Lilly is down roughly 1% on Monday. Another Street deal: Goldman Sachs announced plans Monday to buy Innovator Capital Management , a pioneer of defined outcome exchange-traded funds (ETFs), for $2 billion. Innovator created the first defined outcome (also known as buffer) ETF in 2018 and has amassed $28 billion of assets under supervision as of Sept. 30. Buffer ETFs use derivatives and option-based strategies to offer a specific cap on upside and provide a downside buffer over a set period of time. For example, the objective of its Innovator U.S. Equity Power Buffer ETF is to track the return of the S & P 500, but the upside is capped at a specified level, and its investors are protected against the first 15% of losses over an outcome period. Goldman said that the deal will “significantly expand Goldman Sachs Asset Management’s ETF lineup and future product roadmap, and enhance the firm’s offerings in one of the fastest-growing active ETF categories.” This isn’t the first deal Goldman made this year to boost its asset and wealth management (AWM) division, a push March Nachmann, Goldman’s global head of AWM, told the Investing Club back in August. It also struck a deal with T. Rowe Price in September to create private market products for investors. Up next: MongoDB reports after the market closes on Monday. United Natural Foods and Signet Jewelers will post results before Tuesday’s opening bell. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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.
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