Inside Out: LLY and the Future of Weight Loss Drugs

invest smarter with Schwab. We're back on Morning Trade live. Let's take a look at this chart for Eli Lilly. Of course reporting earnings this morning. And we look pretty good. It's getting rewarded today. It's up 4.2% right now. Over the course of the year it's up 51%. Year to date. It's up about 8%. And It obviously trading at 1163 in change right now. Quite a stark contrast to what we saw with Novo Nordisk overnight. Even though those 80 hours as we just mentioned, are rallying this morning. But let's go inside out on what we learned from Eli Lilly. Joining us now around the desk here at the New York Stock Exchange is Matthew Tuttle CEO CEO Tuttle Capital Management. Matthew, thank you so much for your time. Thank you very much for having me. What did you make of it? I mean, investors like what they heard, investors like what they heard. It was a complete and total blowout. You know, nothing but good things to say about it. If you wanted to take a negative, maybe, you know, the, the oral which the name I'm going to mess up. So I'm not even going to bother. But you know, there you go. I think I, I don't know, I'm not even going to bother with it. But you know it beat expectations. It's still trailing novo. Yeah. And you know I do think that the future is oral. I mean I think you've always got a bunch of people who aren't going to want to take a shot. But you know, that's nitpicking. How sustainable do you think these kind of numbers are for, for their portfolio? I mean, with some of these blockbuster names. So I think it is completely sustainable. So, you know, the basis of what we teach investors and in our heat formula, the T is for themes. And you want to focus on the top themes. And you know Americans are getting fatter and getting diabetes. You know, Lilly is at the forefront of being able to kind of fix that, at least on the drug side. So we don't see that changing. You know, we are guilty here on Wall Street of sort of, you know, chucking them in the same basket. I mean, when you talk about Eli Novo, I mean, obviously they're competing in the same market here as well. But I mean is it even a race anymore? I mean, particularly given we've heard from both of these companies today, it seemed to be like a pretty high profile slip on Wegovy, which, you know, many investors, when it comes to Novo, were betting on just big shortfall there, not as high sales numbers as Eli. I mean, has it just pulled ahead as far as the horse in the race here. Yeah. I mean they are the obvious leader. I think they're the must own in the category. I wouldn't mind owning Novo as well. But Lilly would would definitely be a bigger piece of the portfolio. You know I think you want the whole weight loss diabetes spectrum. But Lilly is the clear leader. And no, I don't I don't think it's a race anymore. Okay. And you like the stock here. I mean, you know, when you take a look at it's trading as I mentioned 1161 and change right now forward p e of 33 times. I mean I do and the only reason I don't own it is I don't have an ETF to put it in. You know we're ETF guys. If I had an ETF to put it in we would definitely own it. And yeah I definitely like the stock here. What's the story with these guys moving forward. I mean you know we have heard stories of them looking to diversify their portfolio. You know use the money that has driven these profits so high from obviously the weight loss drugs to double down and reinvest in other parts of the market. I mean, how much are you paying attention to that? So what I'm paying attention to is peptides and Rita specifically, and certainly we will have an ETF to put this in before Rita comes out because I think Rita is a game changer. You know what the GLP ones can do. I think Rita can do a lot better. And I think you've got a lot of people who maybe wouldn't take a GLP one who would take Rita. So I am laser focused on on that. And in any other peptides that come out with. I do think that's kind of the next level that we're going to see in health care. And that could be a massive game changer. What about Hims and hers though? I mean, they seem to be this view out there that they've got a sort of first mover advantage, particularly when it comes to peptides if they get the FDA approval. I mean, they may it seems like Lilly's got the first mover on Rita. There are other peptides BPC 157 and, you know, in a bunch of others. And Hims is another name. We would be laser focused on. And we're working on an ETF to invest in these peptide companies. Because again, I just I love this area. I think it's the next level in health care. And are you looking at health care, broadly speaking? I mean, it looks like, you know, obviously what we've heard today is giving a lift to the entire sector. I mean, it has been performing better this year. I know it typically does in a midterm election year as well. I mean, how are you looking at the broader space. So I'm not looking at the broad space. What I want to look at, I want to look at Lilly. I want to look at hims. I want to look at Novo. What we're also looking at is AI in health care. You know Jensen Wong has said this. Marc Andreessen has said this, that the biggest beneficiary of AI is going to be health care. There's not a lot of pure plays in there right now. So, you know, there's Tempest AI, which I don't own currently, but I do tend to buy a lot. I like to try to buy dips in that name when I can. You know, there not a lot of pure plays there yet, but that's an area over the next couple of years that I think is going to be massive and something we're going to be really keeping an eye on. Okay. So you're looking at being selective, particularly when it comes to the sort of use cases for everyday people like you and I when it comes to artificial intelligence. Anything else you like about this? I mean, you know what, 4% pop right now? Do you think, you know, that's exactly how you'd expect the stock to trade off the back of what we heard. That is. I mean, it's not a memory stock. You know you've got SanDisk earnings tonight. If SanDisk was only up 4% you know that'd be a little bit weird. Sure. But you know stock like Lilly. Yeah. I mean that's a huge move for a stock like that. You know exactly in line with what I would expect certainly is. And as I said, health care seems to be having a good day up by 1% right now as well. Matthew. Always appreciate it. Thanks for dropping by. Nice to see you in the flesh. Thanks for having me. Matthew Tuttle there, CEO, CIO, Tuttle Capital Management. Appreciate it. Let's trade this now with Tom white, host of Fast Market. Walk us through an example. Trade for Lilly this morning Tom. Yeah pretty good report. 48% revenue growth $2 billion above expectations there. And their weight loss drugs are, you know, moving to the upside as far as revenue growth, 91% from Mounjaro, year over year, nearly 50% on Zepbound. So yeah, the stock's moving higher. It's still below those all time highs, basically about 6% off of those levels. So I looked at something a little bit more passive. You can be aggressive. You can buy a call vertical or buy some calls in Eli Lilly. I think the key here is still an expensive stock $160. So maybe some risk to find strategies leveraging that option. Markets went out to the August monthly option. So just about two and a half weeks to expiration on this one. And I'm just going to sell an out of the money neutral to bullish put vertical going to sell the August 1130 puts and then buy the 1110 strike puts or short $20 wide neutral to bullish put vertical. You're going to collect roughly about an $8 credit on this. So you can make about 8 or 800 bucks with about $1,200 in risk. It's got a pretty good risk reward set up here on an out of the money put vertical. It takes your break even down to 1122 to the downside. That's about 3.2% below the current share price. So you're giving yourself that better odds of success on this type of trade where if the stock trades higher, consolidates here, or even goes a little bit lower, you can still be profitable on this trade. The probability that that 1130 strike will be out of the money at expiration over the next 16 days is about 60%. So that's why you're collecting a little bit more option premium versus the risk on this one. It's a little bit more aggressive, but still giving you more than a 3% cushion to the downside. So not aggressive. It's an $1,160 stock. So being a little bit more passive, a little bit more cautious in case we do get a pullback here might be the play. If you want to be more aggressive you can buy a call vertical to the upside or just buy straight calls. There's still quite a bit of option premium in the name just due to the high price point. All right Tom I want to leave us with a quick market thought here. I mean off the record highs. Now that we said at the open the index and the Russell have both slipped now. Yeah. Sam you know the momentum yesterday as the day went on we didn't get any dips at all. So the the momentum in buying in the market was pretty substantial. You saw a lot of call volume, the S&P 500 options market to it was a record for pushes into call buying in there. So risk on sentiment is still active at this point. We're seeing a bit of a pullback in some of the tech names. Not surprising. But with the S&P 500 and the Dow at more record highs, you could probably expect this to continue being driven by earnings at this point. Sam we're pushing aside those geopolitical headlines at this point. And earnings have been pretty solid. Yep. Next up obviously Western Dig