Breaking news September 2nd at 5pm
Drugs for the weight loss Eli Lilly’s stock price has pushed up, and the company could soon join the exclusive club of companies with a market cap of $1 trillion. Berkshire Hathaway became the first non-tech company to surpass that threshold, and analysts are now wondering whether pharmaceutical giant Eli Lilly could be next.
The boom in anti-obesity drugs
Eli Lilly is riding the wave of success of Mounjaro e Zepboundits injectable GLP-1 drugs for weight losswhich are also used to treat diabetes and cardiovascular disease. The company’s shares have risen 65% this year, bringing its market capitalization to about $865 billion, just 16% shy of the $1 trillion mark. The stock gained another 2% on Friday, August 30.
An imminent milestone?
The question now is: How long will it take Why Eli Lilly is reaching this milestone? The company’s shares have risen more than 20% in the past three weeks, following its strong earnings report on August 8. The next quarterly reportdue on October 30, could be the catalyst that pushes the company past the $1 trillion milestone, joining Nvidia, Microsoft, Apple, Alphabet, Amazon and Meta.
Wall Street’s consensus price target for Eli Lilly shares is just below 1,012 dollarsan increase of about 5.5% from current levels. At that price, the company’s market capitalization would exceed $910 billion. With about 900.9 million shares outstanding, the stock would need to surpass $1,110 for Eli Lilly to reach a valuation of $1 trillion.
Optimistic forecasts from analysts
Many analysts are confident that Eli Lilly will soon approach, if not surpass, this level. Evan Seigerman BMO Capital Markets has set a $1,101 price target for the company’s shares, speculating that Lilly could become a GOAT, short for Greatest of All Time.
Mounjaro Sales have more than tripled in the second fiscal quarter, reaching approximately $3.1 billion, and Mounjaro and Zepbound now represent nearly 40% of Eli Lilly’s total sales. Seigerman praised Lilly’s commercial excellence in the U.S. market and expects improved manufacturing capacity and more effective commercial execution in the European Union markets for GLP-1 drugs.
- Read also: Pharma, Eli Lilly raises earnings and revenue estimates and soars on the stock market thanks to the anti-obesity drug
Future prospects and risks
Terence Flynn in Morgan Stanley is even more optimistic, with a price target of $1,106, arguing that «Mount Mounjaro» could take Eli Lilly’s market cap to a trillion thanks to its GLP-1 drugs. Also Bank of America is very bullish on Eli Lilly’s prospects, raising its price target to $1.15 trillion, the highest on Wall Street, and estimating that sales of Mounjaro and Zepbound will increase further in 2024, 2025 and 2026.
There is no shortage of risks for the title, in particular its extremely high valuation, with a price/earnings ratio of nearly 60 times versus 23 times for the S&P 500. However, Eli Lilly has so far beaten expectations. Earnings are expected to double in 2024 and increase another 40% in 2025, while sales are expected to grow more than 35% and 25% in 2025. These numbers may even prove conservative, given that analysts have been steadily increasing their estimates in recent months, with Lilly regularly beating forecasts.
Novo Nordisk’s competition
Eli Lilly also faces stiff competition from Novo Nordisk, maker of competing drugs GLP-1 Ozempic e Wegovy, as well as challengers like Hims & Hers Health, which sell cheaper, compounded versions of these drugs containing semaglutide, the active ingredient in GLP-1 therapies.
Furthermore, companies like Pfizer are developing oral versions of GLP-1 drugs for those who prefer taking a pill rather than an injection. Lilly is also working on a daily weight-loss pill called orforglipron. Despite some potential slowdown in 2025, betting against Eli Lilly stock may not be a wise move. finish line trillion dollar world seems inevitable, with more and more people looking for weight loss solutions.
(Translated from the original version by Milano Finanza Editorial Staff)
