Eli Lilly has outperformed the S&P 500 for five straight years as Wall Street recognizes its big opportunity in obesity drugs. Six in a row is not out of the question. Year-To-Date Performance: 33.7% Forward Price-to-Earnings Ratio: 34.3 vs Five-Year Average 34.5 Our Rating: Buy Equivalent 1 Our Price Target: $1,000 LLY YTD Mountain Eli Lilly’s Year-to-Date Stock Performance . ’24 Look Back The dominant theme for Eli Lilly this year was the rollout of its flagship GLP-1 obesity drug Zepbound, which was approved by the Food and Drug Administration in late 2023. It’s been quite a success: According to analyst estimates compiled by FactSet, sales are expected to be about $5.1 billion. Late last year, Wall Street predicted Zepbound revenue of $1.9 billion. An upward revision of this magnitude helps explain why the stock has followed up its 59% jump with another strong year in 2023. Eli Lilly has steadily increased supplies of Zepbound and sister drug Mounjaro, which is used to treat type-2 diabetes, in an effort to offset near-term shortages amid surging demand. But just as importantly, the company announced several additional manufacturing investments, with a new investment seemingly every few months, as a sign of long-term confidence in the GLP-1 market. Given Lilly’s decades-long pursuit of Alzheimer’s, it’s worth noting that the company’s first successful treatment for the memory-destroying disease, Kisunla, was approved in July, though it has yet to generate material revenue. . ’25 Look Ahead Eli Lilly’s ability to increase the available supply of Zipbound and Monjaro will be critical in the new year. This seems obvious on its face, but there is an even more important explanation: Keeping these products off the FDA’s shortage list would hinder the ability of so-called compounding pharmacies to make unapproved copies of the drugs. . Another area to watch in 2025 is whether the FDA expands the label on Zipbound, which would allow the obesity drug to be prescribed as a treatment for other conditions, such as obstructive sleep apnea and Reducing the risks of heart failure. This will help build a case for wider insurance coverage and, in turn, a greater revenue opportunity. Updates on Eli Lilly’s weight-loss pipeline could also be important, particularly the expected readout of its late-stage trial for an obesity pill or forgliprone. Mid-stage results, due out in June 2023, showed it was highly effective, and Wall Street called the oral version of the obesity treatment critical to meeting growing demand. Zepbound and its leading competitor, Novo Nordisk’s Wegovy, are taken by once-weekly injection. In the coming year, investors will keep a close eye on health policy outside of Washington, particularly as prominent pharmaceutical industry critic Robert F. Kennedy Jr. awaits confirmation to run the Department of Health and Human Services. Despite recently telling Jim that he sees GLP-1s as part of the solution to America’s obesity crisis, Kennedy has often mocked the drug in the past. Additionally, it’s unclear what the incoming Trump administration might mean for the Biden White House’s proposal to expand Medicare and Medicaid access to GLP-1s. Positive updates from other hopeful challengers such as Novo Nordisk and Viking Therapeutics could pressure Lilly’s shares in the short term, but we believe in its competitive moat, due in large part to its productivity. Jim Cramer recently named Eli Lilly as one of the 12 core holdings of his 2025 portfolio. (Jim Cramer’s Charitable Trust is long LLY. See here for a complete list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. The Investing Club information above is subject to our terms and conditions and privacy policy, along with our disclaimer. No formal obligation or duty exists, or is created, by reason of your receipt of any information provided in connection with Investing Club. No specific results or profits are guaranteed.
Eli Lilly & Co. Zip Bound Injection Pen held at Brooklyn Borough of New York, US on Thursday, March 28, 2024.
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