Jim Cramer Picks J&J (JNJ) Over Eli Lilly (LLY) and Pfizer (PFE) Among These Healthcare Stocks
π Eli Lilly reported Q2 revenue of $23 billion, a 48% increase year-over-year.
π Mounjaro revenue surged 91% to $9.9 billion, while US Zepbound grew 44% to $4.9 billion.
π The company raised its 2026 revenue guidance to $85-$87 billion.
π° Reported EPS increased 26% to $7.94, with non-GAAP EPS rising 33% to $8.38.
π LLY trades at a forward P/E of 24.57, higher than peers J&J (21.74) and Pfizer (9.88).
π¦ Institutional ownership increased, with 152 hedge funds holding the stock in Q2.
β οΈ The stock faces risks from high valuation expectations and potential demand slowdowns.
π Short interest is low at approximately 0.7%-0.8% of the float.
Bullish Signals
- Eli Lilly achieved a massive 48% revenue jump to $23 billion in Q2, driven by explosive growth in its weight-loss franchise.
- Mounjaro revenue increased 91% to $9.9 billion and US Zepbound grew 44% to $4.9 billion, validating the core investment thesis.
- The company successfully raised its 2026 revenue guidance to $85-$87 billion, demonstrating confidence in future demand.
- EPS growth was strong with reported earnings up 26% to $7.94 and non-GAAP earnings up 33% to $8.38.
- Institutional interest is growing, evidenced by a rise in hedge fund holders from 132 to 152 in the second quarter.
Risk Factors
- The stock trades at a forward P/E of 24.57, which is significantly higher than peers like J&J (21.74) and Pfizer (9.88), indicating high valuation risk.
- High expectations are already reflected in the current price, leaving the stock vulnerable to any slowdown in demand or pricing pressure.
- Continued heavy reliance on Mounjaro and Zepbound for growth exposes the company to risks from competition and potential market saturation.
Full Analysis
Jim Cramer recently weighed in on healthcare stocks, specifically comparing Eli Lilly (LLY), Johnson & Johnson (JNJ), and Pfizer (PFE). While Cramer prefers J&J for its diversified portfolio and strong balance sheet, he acknowledged that LLY is a solid buy after a recent pullback, noting its key drug franchise potential. The article contextualizes these views against the backdrop of Q2 2026 earnings results from all four major players discussed.
Eli Lilly reported robust second-quarter performance with revenue jumping 48% to $23 billion and EPS rising 26% to $7.94. Growth was driven primarily by its weight-loss portfolio, with Mounjaro revenue surging 91% to $9.9 billion and US Zepbound increasing 44% to $4.9 billion. Consequently, the company raised its full-year 2026 revenue guidance to a range of $85-$87 billion.
Despite its strong growth, LLY trades at a forward P/E of 24.57, which is higher than J&J's 21.74 and Pfizer's 9.88. The primary risk identified for the stock is that high expectations are already priced in, making it vulnerable to any slowdown in demand, pricing pressure, or increased competition from its blockbuster weight-loss drugs.
Institutional positioning data shows LLY held by 152 hedge funds in Q2, an increase from 132 in Q1. Short interest remains low at roughly 0.7%-0.8% of float. The article concludes that while LLY offers the strongest growth profile among the group, investors must weigh this against its valuation premium compared to more diversified or value-oriented peers like J&J and Pfizer.