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The sheer size and dominance of the “Magnificent 7” club has been well documented, especially in light of their enormous role in Wall Street’s current bull run. Every member, excluding Tesla (TSLA), sits comfortably above $1 trillion in market cap today.
But that $1 trillion club may soon have some new members, and rarely, they would be the first to move into the non-tech sector. The companies are Warren Buffett’s sprawling Berkshire Hathaway conglomerate (NYSE:BRK.A) (NYSE:BRK.B) and the pharmaceutical company Eli Lilly (NYSE: LLY).
Berkshire (BRK.A) (BRK.B) has been growing slowly and steadily in size. The legacy company was founded in 1839 as a textile manufacturer until its restructuring into a conglomerate starting in 1956 under the leadership of Buffett and longtime business partner and friend, Charlie Munger, who died in late 2023 at age 99 years old.
Meanwhile, Eli Lilly (LLY) has seen rapid growth recently, largely on the back of the craze for weight-loss GLP-1 agonists, including Lilly’s (LLY) Zepbound (tirzepatide), which has led investors to flock in mass on the title and to make it the best-selling title worldwide. the largest publicly traded pharmaceutical company.
Close to $1 trillion
According to Berkshire’s (BRK.A) (BRK.B) latest annual report, the company had approximately 566.6 thousand shares of Class A common stock outstanding and approximately 1.31 million shares of Class A common stock outstanding. class B. Based on BRK.A’s latest closing price of $613,965.01 and BRK.B’s latest closing price of $407.11, the conglomerate’s current market capitalization is $881, 53 billion.
According to Eli Lilly (LLY)’s latest annual report, the drugmaker had 950.2 million shares outstanding as of February 16, 2024. Lilly (LLY) stock last closed at $782.12, giving the company a market capitalization of $743.14 billion.
Tribute to Munger, Berkshire’s record pile of cash
The American conglomerate last weekend released its latest quarterly results as Warren Buffett released his long-awaited and closely read annual letter to shareholders.
Buffett began the letter with a long tribute to Charlie Munger. The 93-year-old chairman and CEO called Munger “the architect of today’s Berkshire,” adding that “Charlie never tried to take credit for creating him, but instead let me bow down and take the credit.” recognitions”.
Buffett also pointed out that focusing on what the company calls “operating earnings” was the best way to get a sense of the massive conglomerate’s growth. “The main difference between the mandatory and Berkshire (BRK.A) (BRK.B) preferred figures is that we exclude unrealized capital gains or losses that can sometimes exceed $5 billion per day,” Buffett said .
Berkshire’s (BRK.A) (BRK.B) fourth-quarter 2023 operating earnings rose 28% y/y to $8.48 billion, while full-year operating earnings rose 21% to 37.35 billion dollars. Cash and short-term securities on the company’s balance sheet grew to a record $167.6 billion, helped by high interest on short-term Treasury securities.
Americans want to lose weight, Lilly makes hay
Last November, the U.S. Food and Drug Administration approved Eli Lilly’s GLP-1 agonist Zepbound (tirzepatide) for the chronic treatment of weight management in obese or overweight adults with at least one weight-related condition (such as high blood pressure , type 2 diabetes or high cholesterol). ).
Since that approval, shares of Lilly (LLY) have risen 26.3%, further cementing the pharmaceutical company in its position as the largest pharmaceutical company in the world. Lilly’s tirzepatide (LLY) was previously approved under the brand name Mounjaro to be used along with diet and exercise to help improve blood sugar in adults with type 2 diabetes mellitus.
The pharmaceutical company in its latest quarterly results reported Mounjaro sales of $2.21 billion compared to $279.2 million a year ago. Zepbound sales totaled $175.8 million. Overall total revenues increased 28% y/y to $9.35 billion.
The current worldwide craze for anti-obesity and weight loss drugs was sparked by the popularity of Danish drugmaker Novo Nordisk’s (NVO) GLP-1 agonist semaglutide, marketed under the trade names Ozempic and Wegovy. The unprecedented demand for these drugs helped push Novo’s (NVO) market capitalization past $400 billion and even briefly propelled it to the position of the largest publicly traded company in Europe.
Demand is unlikely to disappear anytime soon. A recent study conducted by Imperial College London, funded by the UK’s Medical Research Council and published in The Lancet found that in 2022, more than 1 billion people worldwide were living with obesity.
Bank of America raised its price target on Eli Lilly (LLY) stock to a high of $1,000 on Friday, which represents an upside of nearly 28% from the stock’s latest closing price and implies a market capitalization of $950.16 billion for the pharmaceutical company.