Eli Lilly (NYSE: LLY) It may seem like an expensive stock to invest in right now. It trades at almost 90 times its current earnings. Its market cap of $720 billion also means it is the most valuable healthcare stock in the world.
While it may seem like the stock has peaked given the slowdown in stock prices in recent weeks, there could be a huge catalyst for the company next year. It’s one that investors should keep a close eye on as it could send shares to record highs in 2025.
Eli Lilly is a big name in diabetes care and weight loss. Tirzepatide generates billions in revenue for the healthcare company. It is a GLP-1 injection approved for diabetes under the Mounjaro brand and for weight loss under Zepbound. But what investors really want to know is whether the company will have a GLP-1 weight loss pill in its portfolio in the near future.
Eli Lilly expects to have data by April 2025 to report on a late-stage trial of orforglipron, an oral GLP-1 drug that has shown promise so far. Results from the Phase 2 trial showed that the once-daily pill helped obese and overweight adults lose up to 14.7% of their body weight over a 36-week period. Now the Phase 3 trial data is coming in and if it proves to be just as promising and has no serious side effects, it could be a matter of time before the Food and Drug Administration approves it.
And since investors often buy a stock before its official approval, it wouldn’t be surprising if Eli Lilly stock soars if the trial results look good.
Eli Lilly already has a solid selection of products in its portfolio, with Mounjaro and Zepbound leading the way. They have enabled the company to dramatically grow its revenue in recent quarters. And what’s encouraging is that these products are still in the early stages of growth.
There could also be more indications for these drugs, allowing them to reach more patients. For example, Zepbound could soon be approved as a treatment for sleep apnea, given the effectiveness it has shown in clinical trials.
As more studies of these drugs are completed, they could gain approval for more indications, increasing their revenue potential. Zepbound and Mounjaro posted combined sales of nearly $4.4 billion during the most recent quarter ended September 30, accounting for 38% of the company’s total sales.
Having another weight-loss drug in Eli Lilly’s portfolio could quickly ease concerns about the company’s valuation. It is an early leader in the highly lucrative obesity drug market, which some analysts say could be worth $200 billion by 2031.
Eli Lilly stock has fallen in recent months, but if you’re a long-term investor, this could be an excellent investment to put in your portfolio and simply hold.
Its valuation may seem expensive, but it isn’t if you focus on the long term. Eli Lilly trades at a price-to-earnings ratio of 37 (based on analyst estimates for next year’s earnings) and if it dominates the huge anti-obesity market, it could look like an even bigger bargain in five or ten years.
The stock appears to be well-positioned to become the first healthcare company to reach a market value of $1 trillion. Not only is it likely that Eli Lilly stock will rise next year, but it could be a slam-dunk buy for many years after that.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Eli Lilly Stock Could Have a Huge Growth Catalyst in Early 2025 Originally published by The Motley Fool
