Eli Lilly climbs on win for rival weight-loss drug, and we still feel good about Abbott Labs

By News Room Last updated Mar 28, 2024

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. (We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible.) Markets: Stocks are finishing out March and the first quarter — with the S & P 500 on track for it’s best start to the year since 2019 — on a quiet note. Thursday’s session is playing out in similar fashion to most of March, with leadership rotating from technology stocks into other areas of the market as the record rally broadens out . GLP-1 check in : Eli Lilly shares rose about 0.5% after the first major U.S. health insurers said they will cover Novo Nordisk’s obesity medication Wegovy for the use of reducing the risk of heart attack and strokes. To be eligible, patients will need to have cardiovascular disease, meet a certain weight criteria, and be covered by a Medicare Part D drug benefit plan, but it’s a good start. The news supports the bullish thesis that as clinical trials show GLP-1 drugs deliver health benefits beyond weight loss, insurers will be more inclined to cover them. Meanwhile, Bloomberg reported that Lilly’s Zepbound — the Club holding’s rival to Wegovy — is in short supply at Amazon Pharmacy and Rite Aid. Zepbound and Wegovy are part of the fast-growing GLP-1 class of drugs. Abbott update : Shares of Abbott Laboratories were slightly higher Thursday, on pace for their third straight day of gains. We are “feeling good about Abbott Laboratories in light of its recent litigation-related pullback,” Jim Cramer said. We added to our Abbott Labs position a week ago on the view that the market capitalization lost from potential litigation greatly exceeds what the company could end up paying to settle the outstanding cases. We also bought Abbott shares on March 15. “We recognize that its first infant formula case is in St. Louis, which is a tough jurisdiction for the defense,” Jim explained. Competitor “Reckitt’s Mead Johnson [subsidiary] had a really bad verdict in Illinois. The jury said Mead failed to warn of the risk of NEC, which is a gastrointestinal disease. It was never an issue of a defective product. Formula for premature infants has been recommended by doctors for decades. That doesn’t mean Abbott can’t lose this first case, but this is a very different situation from Johnson & Johnson’s talc issue.” We exited our position in J & J last year due to its litigation overhang. Around the portfolio: Home Depot announced Friday it will acquire the building products supplier SRS Distribution for $18.25 billion in a move that will bulk up its business focused on professional contractors. “Stanley Black & Decker—like it. Home Depot is getting bigger in housing, which is a good sign for the tool group,” Jim said. Estee Lauder said its Clinique brand is available within Amazon’s Premium Beauty store in the U.S. The embattled cosmetics company was the top-performing Club stock in Thursday’s session, boosted by an upgrade at Bank of America . “People realize that, at last, there is pulse at Estee Lauder. Finally there’s a new strategy with Amazon, so no longer are we hoping that China and travel duty free will come back,” Jim said. Reminder: The U.S. stock market is closed Friday in observance of Good Friday, so there will be no Morning Meeting or Homestretch. (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.

Eli Lilly headquarters in Indianapolis, Indiana, US, on Wednesday, May 3, 2023. Eli Lilly & Co.’s shares climbed in early US trading after its experimental drug for Alzheimer’s slowed the progress of the disease in a final-stage trial, paving the way for the company to apply for US approval.

AJ Mast | Bloomberg | Getty Images

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