In recent times, stock splits have been a trending topic in the market, with big companies like Walmart, Nvidia, and Chipotle Mexican Grill completing such operations in the first half of the year. Stock splits involve issuing more shares to current investors to lower the price of each individual share, making it more accessible to a broader range of investors without changing the company’s fundamental value. The excitement around stock splits comes from the easier access to high-performing stocks that they offer, potentially leading to continued success for companies that have done well in the past.
Eli Lilly and Vertex Pharmaceuticals are two healthcare stocks that have seen significant growth in recent years and may be poised for stock splits. Eli Lilly’s shares have risen by 300% over the past three years, driven by the success of two weight loss drugs, Mounjaro and Zepbound. Despite facing competition, the high demand for these drugs suggests continued revenue growth for Lilly. With the stock approaching $1,000, a split could make it more accessible to investors. Vertex Pharmaceuticals, on the other hand, has seen a 145% increase in its shares over the same period, thanks to its dominance in cystic fibrosis treatment and expansion into new areas like blood disorders and pain management.
Vertex also has a promising candidate, the vanza triple, that could further solidify its position in the cystic fibrosis market. With the stock trading at record highs, a stock split could potentially mark the beginning of a new era of gains for the company. Despite their strong performance, both Eli Lilly and Vertex Pharmaceuticals may see limited investor interest due to their high share prices. A stock split could help attract a broader range of investors and potentially drive further growth for these companies in the future.
It is worth noting that stock splits themselves are not a reason to buy a stock and do not directly cause a stock to rise or fall. However, they can make high-performing stocks more accessible to a wider range of investors, potentially leading to increased interest and continued success for companies like Eli Lilly and Vertex Pharmaceuticals. The healthcare sector, known for its innovation and growth potential, continues to be an attractive area for investors looking to capitalize on the success of companies with strong revenue growth and promising product pipelines.
