Eli Lilly has outperformed the S&P 500 for the fifth year in a row as Wall Street wakes up to a huge opportunity in obesity drugs. It’s not impossible to do it six times in a row. Year-to-date performance: 33.7% up Forward price-to-earnings ratio: 34.3 vs. 5-year average 34.5 Our rating: Buy equivalent 1 Our price target: $1,000 LLY YTD Mountain Eli Lilly’s year-to-date price performance. Looking back at ’24 Eli Lilly’s main theme this year was the rollout of its pivotal GLP-1 obesity drug Zepbound, approved by the Food and Drug Administration in late 2023. It has been quite successful, with revenue expected to be around $5.1 billion, according to analyst estimates compiled by FactSet. At the end of last year, Wall Street expected Zepbound’s revenue to be $1.9 billion. Such an upward revision helps explain why the stock has had an even stronger year following a 59% jump in 2023. Eli Lilly is steadily increasing supplies of Zepbound and its sister drug Mounjaro, used to treat type 2 diabetes, to alleviate short-term shortages as demand soars. But just as importantly, the company announced significant additional manufacturing investments, with new investments coming every few months, as a sign of long-term confidence in the GLP-1 market. Given Lilly’s decades-long efforts to treat Alzheimer’s disease, it’s notable that Kisunra, the company’s first successful treatment for the memory-depriving disease, was approved in July, but it’s still a significant revenue contributor. It’s not. ’25 Outlook Eli Lilly’s ability to expand supply of Zepbound and Mounjaro in the new year is critical. That seems obvious at first glance, but there is a more subtle explanation. Removing these products from the FDA’s shortage list would hamper the ability of so-called compounding pharmacies to manufacture unapproved copies of the drug. Another area to watch in 2025 is whether the FDA will expand Zepbound’s label. This could allow obesity drugs to be prescribed as a treatment for other conditions, such as obstructive sleep apnea and reducing the risk of heart failure. This could build the basis for increased insurance coverage and, in turn, greater profit opportunities. Updates on Eli Lilly’s weight loss pipeline could also be important, most notably expected results from late-stage trials of its obesity drug, or Folglipron. Preliminary results released in June 2023 showed it to be highly effective, and Wall Street sees an oral version of the obesity treatment as key to meeting maximum demand. There is. Zepbound and its biggest rival, Novo Nordisk’s Wegovy, are taken by injection once a week. Over the next year, investors will keep an eye on health care policy outside of Washington, particularly with prominent pharmaceutical industry commentator Robert F. Kennedy Jr. awaiting confirmation as secretary of the Department of Health and Human Services. Despite recently telling Jim that he sees GLP-1 as part of the solution to America’s obesity crisis, Kennedy has frequently mocked the drug in the past. Furthermore, it is unclear what impact the incoming Trump administration will have on President Biden’s proposal to expand access to GLP-1 in Medicare and Medicaid. Although positive updates from Novo Nordisk and potential challengers such as Viking Therapeutics could put pressure on Lilly’s stock in the short term, we believe Lilly’s We are confident in our competitiveness. Jim Cramer recently named Eli Lilly and Co. as one of 12 core holdings in his portfolio heading into 2025. (The Jim Cramer Charitable Trust is a long LLY. See here for a complete list of stocks.) As a subscriber to the CNBC Investment Club with Jim Cramer, before Jim makes a trade, You will receive an alert. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in the charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
Eli Lilly & Co.’s Zepbound injection pen placed on Thursday, March 28, 2024 in the Brooklyn borough of New York City, USA.
Shelby Knowles | Bloomberg | Getty Images
Eli Lilly exceeded S&P500 It’s the fifth year in a row that Wall Street has woken up to the huge opportunity in obesity drugs. It’s not impossible to do it six times in a row.
