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The sheer size and dominance of the “Magnificent 7” club has been well documented, especially in light of their outsized role in Wall Street’s current bull run. Every member sans Tesla (TSLA) sits comfortably above $1T in market capitalization today.
But that $1T club could soon have some new members, and in a rarity, they would be the first non-technology entrants. The companies are Warren Buffett’s sprawling conglomerate Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) and drugmaker Eli Lilly (NYSE:LLY).
Berkshire (BRK.A) (BRK.B) has slowly and steadily grown 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 99.
Meanwhile, Eli Lilly (LLY) has seen rapid growth recently, largely on the back of the craze over weight loss GLP-1 agonists including Lilly’s (LLY) Zepbound (tirzepatide) which has led to investors flocking to the stock and making it the world’s largest publicly listed pharmaceutical firm.
Closing in on $1T
As per Berkshire’s (BRK.A) (BRK.B) latest annual report, the company had around 566.6K outstanding shares of class A common stock and about 1.31M outstanding shares of class B common stock. Based upon BRK.A’s last closing price of $613,965.01 and BRK.B’s last closing price of $407.11, the conglomerate’s current market cap is $881.53B.
According to Eli Lilly’s (LLY) latest annual report, the drugmaker had 950.2M shares outstanding as of February 16, 2024. Lilly (LLY) stock last closed at $782.12, giving the company a market cap of $743.14B.
Munger Tribute, Record Berkshire Cash Pile
The American conglomerate last weekend reported its latest quarterly results while Warren Buffett published his eagerly-anticipated and closely-perused annual letter to shareholders.
Buffett began the letter with a lengthy tribute to Charlie Munger. The 93-year-old chairman and CEO called Munger “the architect of the present Berkshire,” adding that “Charlie never sought to take credit for his role as creator but instead let me take the bows and receive the accolades.”
Buffett also highlighted that focusing on what the company calls “operating earnings” was the best way to get an idea of the massive conglomerate’s growth. “The primary difference between the mandated figures and the ones Berkshire (BRK.A) (BRK.B) prefers is that we exclude unrealized capital gains or losses that at times can exceed $5B a day,” Buffett said.
Berkshire’s (BRK.A) (BRK.B) Q4 2023 operating earnings rose 28% Y/Y to $8.48B, while full year operating earnings climbed 21% to $37.35B. Cash and short-term securities on the company’s balance sheet grew to a record $167.6B, helped by elevated interest from short-term Treasury securities.
Americans Want To Lose Weight, Lilly Makes Hay
The U.S. Food and Drug Administration last November approved Eli Lilly’s GLP-1 agonist Zepbound (tirzepatide) to treat chronic 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, Lilly’s (LLY) shares have climbed a hefty 26.3%, further consolidating the drugmaker in its position as the world’s largest pharmaceutical firm. Lilly’s (LLY) tirzepatide had already been approved earlier under the trade name Mounjaro to be used along with diet and exercise to help improve blood sugar in adults with type 2 diabetes mellitus.
The drugmaker in its latest quarterly results reported Mounjaro sales of $2.21B compared to $279.2M a year ago. Zepbound sales came in at $175.8M. Overall total revenue surged 28% Y/Y to $9.35B.
The current craze across the world for obesity and weight loss drugs was sparked by the popularity of Danish drugmaker Novo Nordisk’s (NVO) GLP-1 agonist semaglutide, which is marketed under the trade names Ozempic and Wegovy. Unprecedented demand for those drugs has helped lift Novo’s (NVO) market cap north of $400B and even briefly push it to the position of Europe’s largest publicly listed firm.
The demand is unlikely to go away any time soon. A recent study conducted by the Imperial College London, funded by the UK Medical Research Council and published in The Lancet found that in 2022, more than 1B people in the world were living with obesity.
Bank of America on Friday raised its price target on Eli Lilly (LLY) stock to a Street high of $1,000, representing a nearly 28% upside to the stock’s last closing price and implying a market capitalization of $950.16B for the drugmaker.
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