Eli Lilly looks to extend broad market winning streak to 6 years

Eli Lilly has outperformed the S&P 500 for five consecutive years as Wall Street realizes the huge opportunity it has in obesity drugs. Six in a row is not impossible. YTD Performance: Up 33.7% Forward P/E: 34.3, five-year average of 34.5 Our Rating: Equivalent to Buy 1 Our Price Target: $1,000 LLY YTD Stock Performance Eli Lilly YTD Stock performance. ’24 Review Eli Lilly and Company’s theme this year was the launch of its top GLP-1 obesity drug, Zepbound, which was approved by the U.S. Food and Drug Administration in late 2023. It’s been wildly successful: Sales are expected to be about $5.1 billion, according to analyst estimates compiled by FactSet. Late last year, Wall Street forecast Zepbound revenue of $1.9 billion. Such a large upward revision helps explain the stock’s strong performance following a 59% gain in 2023. Eli Lilly and Company has steadily increased supplies of Zepbound and its sister drug Mounjaro, used to treat type 2 diabetes, to alleviate near-term shortages during a period of high demand. But just as importantly, the company announced a series of additional manufacturing investments, seemingly every few months, a new investment, signaling the company’s long-term confidence in the GLP-1 market. Given Eli Lilly’s decades-long exploration of Alzheimer’s disease, it’s worth noting that the company’s first successful treatment for the memory-depriving disease, Kisunla, was approved in July, even though it has yet to become a material revenue contributor. ’25 Looking ahead Eli Lilly’s ability to expand the available supply of Zepbound and Mounjaro in the new year will be critical. This may seem obvious on the surface, but there’s a more subtle explanation: Excluding these products from the FDA’s shortage list would hinder the ability of so-called compounding pharmacies to produce unapproved copies of drugs. Another area to watch in 2025 is whether the FDA will expand Zepbound’s label, which would allow the obesity drug to be used to treat other conditions, such as obstructive sleep apnea and reduce the risk of heart failure. This will help expand insurance coverage, thereby creating greater revenue opportunities. Updates to Eli Lilly’s weight loss product pipeline may also be important, most notably expected results from a late-stage trial of its obesity drug orforglipron. Interim results released in June 2023 showed the drug was highly effective, and Wall Street believes the oral obesity treatment is critical to meeting the greatest need. Zepbound and its main rival Novo Nordisk’s Wegovy are both taken as a once-weekly injection. Investors will be keeping a close eye on health policy in Washington in the coming year, especially as prominent pharmaceutical industry critic Robert F. Kennedy Jr. awaits confirmation as secretary of the Department of Health and Human Services. Although Kennedy recently told Jim that he believes GLP-1 is part of the solution to America’s obesity crisis, he has often derided these drugs in the past. Additionally, it is unclear what the incoming Trump administration will mean for the Biden White House’s proposal to expand Medicare and Medicaid’s use of GLP-1. Positive updates from other promising challengers like Novo Nordisk and Viking Therapeutics could put pressure on Eli Lilly’s stock in the near term, but we’re confident in its competitive moat, which is largely due to its Manufacturing capability advantages. Jim Cramer recently named Eli Lilly as one of the portfolio’s 12 core holdings through 2025. Subscribers to CNBC Investing Club with Jim Cramer, you will receive trade alerts 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 talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation is created or created by any information you receive in connection with the Investment Club. No specific results or profits are guaranteed.

On Thursday, March 28, 2024, Eli Lilly and Company’s Zepbound injection pen was installed in Brooklyn, New York, the United States.

Shelby Knowles | Bloomberg | Getty Images

Eli Lilly and Company has gone beyond S&P 500 Index This is happening five years in a row as Wall Street realizes the huge opportunity in obesity drugs. Six in a row is not impossible.

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