Eli Lilly has outperformed the S & P 500 for five straight years as Wall Street woke as much as its massive opportunity in obesity drugs. Six in a row shouldn’t be out of the query. Yr-to-date performance: Up 33.7% Forward price-to-earnings ratio: 34.3 versus five-year average of 34.5 Our rating: Buy-equivalent 1 Our price goal: $1,000 LLY YTD mountain Eli Lilly’s year-to-date stock performance. ’24 look back The dominant theme for Eli Lilly this yr was the rollout of its all-important GLP-1 obesity drug Zepbound, which was approved by the Food and Drug Administration in late 2023 . It has been quite the success: Sales are projected to be roughly $5.1 billion, in line with analyst estimates compiled by FactSet. At the tip of last yr, Wall Street forecast Zepbound revenues of $1.9 billion. Upward revisions of that magnitude help explain why the stock has followed up its 59% leap in 2023 with one other strong yr. Eli Lilly has steadily increased supply of Zepbound and sister drug Mounjaro, which is used to treat type-2 diabetes, in an effort to alleviate near-term shortages amid booming demand. But just as crucially, the corporate announced a slew of additional manufacturing investments , with a recent one seemingly every few months , in an indication of long-term confidence in regards to the GLP-1 market. Given Lilly’s decades-long quest on Alzheimer’s , it’s value noting the corporate’s first successful treatment for the memory-robbing disease, Kisunla, was approved in July , though it hasn’t been a fabric revenue contributor just yet. ’25 look ahead Eli Lilly’s ability to expand available supply of Zepbound and Mounjaro in the brand new yr will likely be crucial. That seems obvious on its face, but there may be a more nuanced explanation: Keeping those products off the FDA’s shortage list will hamper the flexibility of so-called compounded pharmacies to make unapproved copies of the drugs. One other area to observe in 2025 is whether or not the FDA expands the label on Zepbound, which might allow the obesity drug to be prescribed as a treatment for other conditions, similar to obstructive sleep apnea and cutting heart failure risks . That may help construct the case for broader insurance coverage and, in turn, a much bigger revenue opportunity. Updates on Eli Lilly’s weight reduction pipeline may be significant, most notably the expected readout of its late-stage trial for obesity pill orforglipron. Mid-stage results released in June 2023 showed it was highly effective, and Wall Street sees oral versions of obesity treatments as being critical to satisfy maximum demand. Zepbound and its leading rival, Novo Nordisk ‘s Wegovy, are taken via once-weekly injection. Within the yr ahead, investors will keep a detailed eye on health policy out of Washington, especially with noted pharmaceutical industry critic Robert F. Kennedy Jr. awaiting confirmation to run the Department of Health and Human Services. Despite recently telling Jim he sees GLP-1s as a part of the answer to the U.S. obesity crisis, Kennedy has steadily derided the drugs up to now . Moreover, it’s unclear what the incoming Trump administration could mean for the Biden White House’s proposal to expand Medicare and Medicaid access to GLP-1s . Positive updates from Novo Nordisk and other hopeful challengers similar to Viking Therapeutics could within the short run put pressure on Lilly shares, but we’re confident in its competitive moat, due largely to its manufacturing capability benefits. Jim Cramer recently named Eli Lilly as certainly one of the portfolio’s 12 core holdings heading into 2025. (Jim Cramer’s Charitable Trust is long LLY. See here for a full list of the 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 a stock in his charitable trust’s portfolio. If Jim has talked a few stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
An Eli Lilly & Co. Zepbound injection pen arranged within the Brooklyn borough of Recent York, US, on Thursday, March 28, 2024.Â
Shelby Knowles | Bloomberg | Getty Images
Eli Lilly has outperformed the S&P 500 for five straight years as Wall Street woke as much as its massive opportunity in obesity drugs. Six in a row shouldn’t be out of the query.
