Eli Lilly taps into its GLP-1 windfall, while Honeywell sheds a lower-margin unit
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch, an actionable afternoon update just in time for the final hour of trading on Wall Street. Stocks fell from record highs after oil rose 5% to $80 a barrel on uncertainty about commercial ship traffic in the Strait of Hormuz. Although the movement in the oil market was notable, the market decline was not as bad as feared because Treasury yields were little changed. Honeywell has announced another step in its ongoing portfolio transformation. The company is selling its Productivity Solutions and Services (PSS) business to Brady Corporation for $1.4 billion in cash. PSS is a leading provider of mobile computers, barcode scanners and printing solutions serving the warehouse and logistics market. Honeywell submitted PSS and its Warehouse and Workflow Solutions (WWS) business to strategic review last July, and this sale is a result of that process. The company is still looking for a buyer for WWS. We’re fans of Honeywell reshaping its portfolio, getting rid of cyclical, slower-growing, lower-margin businesses like PSS. However, we are neutral on this development because the $1.4 billion sale price was lower than many expected. Still, eliminating this unwanted business will make for a cleaner story when Automation becomes a standalone business following the Aerospace split later this year. Honeywell reported first-quarter earnings before the opening bell on Thursday, and although the war in Iran will likely put pressure on quarterly results, we expect management to keep its full-year outlook unchanged. Eli Lilly is again capitalizing on unexpected obesity to strengthen its pipeline. On Monday, the pharmaceutical giant announced a deal to acquire Kelonia Therapeutics, a clinical-stage biotechnology company focused on cancer treatments. Clinical stage means there are no approved drugs on the market; All assets are still in the experimental stage. Lilly is paying $3.25 billion upfront to acquire Kelonia. The deal could be worth up to $7 billion if certain clinical, regulatory and commercial milestones are met. Our CNBC colleague Angelica Peebles had the opportunity to meet Jacob Van Naarden, head of Lilly’s cancer business. He shared some information about how Kelonia’s technology works. “This is a one-time intravenous therapy,” he told Peebles. “It targets your body’s T cells, transforming them to attack cancer in the body, and requires no preconditioning.” The move continues Lilly’s aggressive deal-making spree and builds on the success of blockbuster GLP-1s: Zepbound for obesity and Mounjaro for type 2 diabetes. Lilly finished last year with $7.3 billion in cash and cash equivalents, up from $3.3 billion at the end of 2024. It generated nearly $9 billion in free cash flow in 2025, up from $3.8 billion in the previous year. Lilly executives know they are in a strong position thanks to their GLP-1 leadership and intend to strengthen the drug pipeline with candidates across therapeutic areas. Lilly invests heavily in internal R&D. In the pharmaceutical industry, companies can never rest on their laurels because patents don’t last forever. They need to always have shots on goal to ensure they have future blockbusters. Less than a month ago, Lilly announced its agreement to acquire Centessa Pharmaceuticals for up to $7.8 billion. Centessa, which is also a clinical-stage company, also works on sleep disorders such as narcolepsy. In early March, Lilly closed its $1.2 billion acquisition of Ventyx Biosciences, which develops oral drugs for inflammatory conditions. This agreement was announced in January. Also in February, Lilly announced a deal worth up to $2.4 billion to acquire cancer-focused Orna Therapeutics. Good news for Wells Fargo and Goldman Sachs: Despite the uncertainty about the war in Iran, the companies are not shy about going public. On Monday, Jersey Mike confidentially filed for an initial public offering. The sandwich chain was valued at about $8 billion after Blackstone bought a majority stake a year ago. The news follows a week of high-profile IPO headlines. On Friday, AI chip maker Cerebras filed to go public on Nasdaq. Wells, who has made growing the investment bank his main focus, was a candidate for the deal, but Goldman was not selected. Madison Air Solutions had a successful IPO last Wednesday. Both Goldman and Wells worked on this first film. Companies reporting after the closing bell include Zions Bancorp and Alaska Air. Tuesday marks the beginning of a big earnings wave, with UnitedHealth Group, GE Aerospace, 3M, Danaher, RTX, Halliburton and DR Horton scheduled to report. On the data side, we will see March retail sales and pending home sales. 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