Eli Lilly has outperformed the S&P 500 for five straight years as Wall Street realized its huge opportunity in obesity drugs. Six in a row is not out of the question. Year-to-date performance: Up 33.7% Forward P/E ratio: 34.3 vs. five-year average of 34.5 Our rating: Equivalent to Buy 1 Our price target: $1,000 LLY mountain to date Eli Lilly stock performance so far this year. Looking back on the 24th The dominant theme for Eli Lilly this year was the launch of its landmark GLP-1 anti-obesity drug, Zepbound, which was approved by the Food and Drug Administration in late 2023. It has been a huge success: It expects sales to reach about $5.1 billion, according to analyst estimates compiled by FactSet. Late last year, Wall Street forecast Zepbound revenue of $1.9 billion. Upward revisions of that magnitude help explain why the stock followed its 59% jump in 2023 with another strong year. Eli Lilly has steadily increased supplies of Zepbound and its sister drug Mounjaro, which is used to treat type 2 diabetes, in an effort to alleviate short-term shortages amid rising demand. But what is equally crucial is that the company announced a series of additional manufacturing investments, seemingly a new one every few months, in a sign of long-term confidence about the LPG-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-robbing disease, Kisunla, was approved in July, although it has yet to contribute significantly to revenue. '25 looks ahead Eli Lilly's ability to expand the available offering of Zepbound and Mounjaro in the new year will be crucial. That seems obvious at first glance, but there's a more nuanced explanation: Keeping those products off the FDA's shortage list will hamper 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 Zepbound's label, which would allow the anti-obesity drug to be prescribed as a treatment for other conditions, such as obstructive sleep apnea, and reduce risks of heart failure. That would help justify broader insurance coverage and, in turn, a greater income opportunity. Updates on Eli Lilly's weight loss line could also be significant, particularly the expected readout of its late-stage trial for the anti-obesity pill, or forglipron. Interim results released in June 2023 showed it was highly effective, and Wall Street sees oral versions of obesity treatments as critical to meeting peak demand. Zepbound and its main rival, Novo Nordisk's Wegovy, are administered via a weekly injection. In the coming year, investors will closely monitor health policy in Washington, especially as prominent pharmaceutical industry critic Robert F. Kennedy Jr. awaits confirmation to lead 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 these drugs in the past. Additionally, 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 rivals like Viking Therapeutics could put pressure on Lilly's stock in the near term, but we're confident in its competitive moat, due in large part to its advantages in manufacturing capacity. Jim Cramer recently named Eli Lilly as one of his top 12 portfolio holdings heading into 2025. (Jim Cramer's Charitable Trust is long LLY. See here for a full list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will 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 fund's 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 ABOVE INVESTMENT 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 THE RECEIPT OF ANY INFORMATION PROVIDED IN RELATION TO THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR BENEFITS ARE GUARANTEED.
An Eli Lilly & Co. Zepbound injection pen placed in the Brooklyn borough of New York, U.S., on Thursday, March 28, 2024.
Shelby Knowles | Bloomberg | fake images
Eli Lilly has surpassed S&P 500 for five consecutive years as Wall Street realized the enormous opportunity obesity drugs offered. Six in a row is not out of the question.
