Are stock splits trendy? Two years ago, several high-profile companies made such actions when their shares became unmanageable. A 50-for-1 stock split is imminent for Chipotle, a leading fast-casual food business. Perhaps it was time—Chipotle trades near $3,000 per share.
In that vein, stock splits may help other significant firms whose shares have risen recently. Take Eli Lilly (NYSE: LLY) and Regeneron Pharmaceuticals (NASDAQ: REGN).
1. Eli Lilly Eli Lilly has divided its stock multiple times, but not since 1997. Much has changed at the company since then. Eli Lilly shares have smashed the market in recent years. It's the largest healthcare corporation by market cap. Its stock price is rising to slightly under $771. A stock split is likely as the drugmaker continues to outperform the market and could reach $1,000 soon.
Tirzepatide, sold as Mounjaro for type 2 diabetes and Zepbound for weight loss, will likely be Eli Lilly's biggest growth driver. Tirzepatide is popular. Despite its first year on the market, it sold over $5 billion. Yet, Eli Lilly has faced challenges. Most recently, the FDA delayed its judgment on donanemab, the company's possible Alzheimer's disease treatment.
The agency's expert panel will evaluate Eli Lilly's clinical trial data supporting donanemab's application. Even if it doesn't get permission, Eli Lilly will be alright in the medium future. (The stock may sell off immediately following an unfavorable decision.) Besides tirzepatide, the company has a strong pipeline that will lead to further therapeutic approvals and label expansions.
Eli Lilly's future is bright regardless of donanemab. Eli Lilly is a good long-term investment regardless of management's stock split decision.
2. Regeneron With its share price near $960, Regeneron may consider a stock split for the first time. As in recent years, Regeneron should continue to produce outstanding returns. The company's two main medicines, wet age-related macular degeneration medication Eylea and eczema treatment Dupixent, offer development potential.
Regeneron co-markets Dupixent with Sanofi and shares Eylea with Bayer. Last year, it received permission for a high-dose Eylea formulation that could attract a reasonable number of patients because to its fewer doses and longer patent life. This new Eylea is a competitor to Roche Holding's 2022 Vabysmo.
Dupixent may soon be approved to treat chronic obstructive pulmonary disease, which could boost revenues by over $1 billion yearly. Regeneron has several late-stage clinical investigations. COVID-19 antibody therapy has caused the company's financial results to fluctuate in recent years. Regeneron won't be hurt by this product's diminishing demand for long.
The company's top- and bottom-line growth and stock price gains should continue. Will Regeneron split its initial stock as its shares become less inexpensive to investors? Time will tell. Regardless, the stock is appealing.
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