Eli Lilly rides the weight-loss-drug wave to a new record high, and is now worth more than $700 billion

• Eli Lilly hit another record high on Tuesday and hit a $700 billion valuation for the first time ever.
• The surge came after the company reported fourth quarter earnings, which showed massive growth for its weight loss drugs.
• Here's what Wall Street is saying about Eli Lilly's earnings results.

Eli Lilly stock hit a new record high on Tuesday, rising as much as 5% to $742 per share after the company reported better than expected fourth quarter earnings.

The surge briefly catapulted Eli Lilly to a valuation of $703 billion, making it the eighth biggest company in the S&P 500, about $150 billion behind Berkshire Hathaway and $120 billion ahead of Tesla.

Eli Lilly stock has since given up all of those gains and is down about 0.5% during the Tuesday trading session.

But Eli Lilly has soared more than 100% over the past year thanks to its fast-growing GLP-1 drug, which helps spur considerable weight loss in patients.

The drug, tirzepatide, is approved for patients suffering from type 2 diabetes under the Mounjaro brand name and is approved for adults suffering from obesity under the Zepbound brand name.

Here are the key results from Eli Lilly's fourth quarter earnings:

• Revenue: $9.35 billion, vs analyst estimates of $8.97 billion
• Adjusted EPS: $2.49, vs analyst estimates of $2.37
• Mounjaro sales: $2.2 billion, vs analyst estimates of $1.8 billion
• Zepbound sales: $175.8 million, vs analyst estimates of $140.7 million

Eli Lilly also offered 2024 revenue guidance of $40.4 billion to $41.6 billion, which was ahead of analyst estimates of $39.1 billion.

Here's what Wall Street is saying about Eli Lilly's earnings results.

JPMorgan: 'Solid quarter with Mounjaro upside'

JPMorgan was impressed by Eli Lilly's results and noted that the company's update indicates more upside ahead.

"Overall, we see this update as a clear positive – the company's incretin franchise continues to trend ahead of our/Street expectations, and LLY is using this upside to ramp investment in its pipeline. While this will weigh on near-term EPS, LLY has one of the most innovative portfolios in the group, and we see these investments translating to significant longer-term growth," JPMorgan said in a note on Tuesday.

JPMorgan also called Eli Lilly "one of our favorite names as we see further upside to Street estimates as Mounjaro continues to ramp, Zepbound fully launches in 2024, and with donanemab potentially representing another growth opportunity in 2025+."

Donanemab is Eli Lilly's drug candidate for the treatment of Alzheimer's. It is still navigating the regulatory pathway to FDA approval.

JPMorgan rates Eli Lilly at "Overweight" with a $650 price target.

Mizuho: 'We haven't scratched the surface in terms of how big the drugs are going to get.'

Mizuho healthcare strategist Jared Holz told CNBC on Tuesday that Eli Lilly's earnings report reinforced just how strong their GLP-1 drug franchise is.

"This is a company that typically guides fairly conservatively, they came in ahead of the Street, I think that's a very good sign. I think the supply and demand imbalance [for GLP-1 drugs] favors the company," Holz said.

Holz said Mounjaro and Zepbound still have a long growth runway because the drugs have yet to reach the people who need them most.

"I don't even think the [GLP-1] drugs are really in the majority of America yet. I think this is pretty much a metropolitan-area drug for the most part. New York, Miami, LA, Dallas are the four cities I've been talking about a lot, but middle America, I don't even think [it's] close," Holz said.

To meet demand, Eli Lilly has earmarked $3 billion to build out its manufacturing capacity, which, combined with Novo Nordisk's manufacturing expansion for its competing GLP-1 drug, makes this "the most substantial manufacturing or capacity buildout we've seen in the drug industry maybe ever," Holz said.

Holz reiterated his view that Eli Lilly's GLP-1 drugs will become one of the best-selling drugs of all time.

"We haven't scratched the surface in terms of how big the drugs are going to get," Holz said.