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Eli Lilly ((LLY - Free Report) ) reported strong quarterly results on Thursaday morning, with revenue increasing 36%, driven primarily by the success of Mounjaro, Zepbound, and Verzenio. The company also saw a significant increase in earnings per share (EPS), up 68% year-on-year and eclipsing analysts’ estimates by 42%.
Eli Lilly raised its full-year revenue guidance by $3 billion and increased its EPS guidance. Additionally, the company highlighted major progress in its pipeline, including the approval of Kisunla for Alzheimer's disease in the U.S., the approval of Jaypirca in Japan for mantle cell lymphoma, and positive results from several clinical trials, notably for tirzepatide in treating heart failure and obesity.
Eli Lilly along with fellow GLP-1 drugmaker Novo Nordisk ((NVO - Free Report) ) and recent industry entrant Hims and Hers Health ((HIMS - Free Report) ), have seen their stocks charge higher over the last year. The adoption of weight loss drugs has been an incredible boon for these companies and has the potential to solve a decades long health crisis. Can Eli Lilly propel itself to the $1 trillion market cap club on the back of this innovation?
Image Source: Zacks Investment Research
The Path to a $1 Trillion Market Cap Stock
Today, Eli Lilly has a market cap of $535 billion, meaning if the stock price can double, LLY would be a trillion-dollar company. What would it take to make the stock double again?
First of all, the GLP-1 market is expected to grow at a rate of over 20% annually, reaching $133 billion worldwide by 2030 and LLY enjoys a dominant position in that market with its blockbuster Mounjaro drug.
Second, it has a rich pipeline of drugs and is making significant advancements in areas such as Alzheimer’s disease, oncology, and autoimmune disorders. Notably, the recent FDA approval of Kisunla for Alzheimer's and positive trial results for other pipeline drugs indicate that Lilly may continue to develop truly impactful and revenue generating products.
Lastly, if we look at Eli Lilly’s sales growth and sales multiple, we can make a very rough estimate of when it may reach $1 trillion. Today, LLY is trading at 10x forward sales of $53 billion. Revenue is expected to grow 23% this year. If LLY can maintain the 20% growth rate it would take three to four years to reach the $100 billion mark.
Thus, if Eli Lilly can maintain its current sales multiple, it could be a $1 trillion stock in less than five years.
Eli Lilly has the Growth to Push the Stock Higher
Based on current analysts estimates, it wouldn’t be unreasonable for Eli Lilly to maintain such impressive growth. We can see sales growth is expected to be above 20% this year and next year and earnings are absolutely exploding higher.
Over the next three to five years EPS are forecast to grow 33.3% annually.
Image Source: Zacks Investment Research
NVO and HIMS are Respectable Stock Alternatives
The GLP-1 trend is clearly massive and some of Eli Lilly’s competitors look appealing. Novo Nordisk and Hims and Hers Health are two stock selling GLP-1 products and have compelling businesses complimenting the trending weight loss segment. They both also reported earnings on Wednesday after the market closed.
Novo Nordisk reported a 24% increase in sales for the first half of 2024, driven by the continued success of its GLP-1 diabetes and obesity treatments. The company’s operating profit rose by 18%, reflecting the high demand for these therapies. With the GLP-1 market expected to expand rapidly in the coming years, Novo Nordisk is well positioned to capitalize on this growth with projected sales growth of 22-28% for 2024.
Hims & Hers Health continues to disrupt the health and wellness space with its accessible and affordable services. The company reported a 52% YoY increase in revenue for Q2 2024, driven by a 43% growth in subscribers. The company’s updated full-year revenue guidance, now projected to be between $1.37 billion and $1.40 billion, underscores its accelerating momentum.
GLP-1 drugs are a recent addition to HIMS product suite, so it may take some time to see the results in its earnings reports. However, HIMS business is thriving without it, so it should only add to these strong results. It should also be noted that HIMS has the best one-year stock performance, but also the richest relative valuation.
Should Investors Buy LLY Stock?
Eli Lilly stock has demonstrated impressive relative strength during recent market volatility, making it a standout stock among this group and the broad market. While its competitors, Novo Nordisk and Hims & Hers Health have not held up quite as well in this market, they are also worthy investment considerations.
For investors looking to increase their exposure to the exciting GLP-1 trend, Eli Lilly may be the next addition to their portfolio.
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Eli Lilly: The Next $1 Trillion Market Cap Stock?
Eli Lilly ((LLY - Free Report) ) reported strong quarterly results on Thursaday morning, with revenue increasing 36%, driven primarily by the success of Mounjaro, Zepbound, and Verzenio. The company also saw a significant increase in earnings per share (EPS), up 68% year-on-year and eclipsing analysts’ estimates by 42%.
Eli Lilly raised its full-year revenue guidance by $3 billion and increased its EPS guidance. Additionally, the company highlighted major progress in its pipeline, including the approval of Kisunla for Alzheimer's disease in the U.S., the approval of Jaypirca in Japan for mantle cell lymphoma, and positive results from several clinical trials, notably for tirzepatide in treating heart failure and obesity.
Eli Lilly along with fellow GLP-1 drugmaker Novo Nordisk ((NVO - Free Report) ) and recent industry entrant Hims and Hers Health ((HIMS - Free Report) ), have seen their stocks charge higher over the last year. The adoption of weight loss drugs has been an incredible boon for these companies and has the potential to solve a decades long health crisis. Can Eli Lilly propel itself to the $1 trillion market cap club on the back of this innovation?
Image Source: Zacks Investment Research
The Path to a $1 Trillion Market Cap Stock
Today, Eli Lilly has a market cap of $535 billion, meaning if the stock price can double, LLY would be a trillion-dollar company. What would it take to make the stock double again?
First of all, the GLP-1 market is expected to grow at a rate of over 20% annually, reaching $133 billion worldwide by 2030 and LLY enjoys a dominant position in that market with its blockbuster Mounjaro drug.
Second, it has a rich pipeline of drugs and is making significant advancements in areas such as Alzheimer’s disease, oncology, and autoimmune disorders. Notably, the recent FDA approval of Kisunla for Alzheimer's and positive trial results for other pipeline drugs indicate that Lilly may continue to develop truly impactful and revenue generating products.
Lastly, if we look at Eli Lilly’s sales growth and sales multiple, we can make a very rough estimate of when it may reach $1 trillion. Today, LLY is trading at 10x forward sales of $53 billion. Revenue is expected to grow 23% this year. If LLY can maintain the 20% growth rate it would take three to four years to reach the $100 billion mark.
Thus, if Eli Lilly can maintain its current sales multiple, it could be a $1 trillion stock in less than five years.
Eli Lilly has the Growth to Push the Stock Higher
Based on current analysts estimates, it wouldn’t be unreasonable for Eli Lilly to maintain such impressive growth. We can see sales growth is expected to be above 20% this year and next year and earnings are absolutely exploding higher.
Over the next three to five years EPS are forecast to grow 33.3% annually.
Image Source: Zacks Investment Research
NVO and HIMS are Respectable Stock Alternatives
The GLP-1 trend is clearly massive and some of Eli Lilly’s competitors look appealing. Novo Nordisk and Hims and Hers Health are two stock selling GLP-1 products and have compelling businesses complimenting the trending weight loss segment. They both also reported earnings on Wednesday after the market closed.
Novo Nordisk reported a 24% increase in sales for the first half of 2024, driven by the continued success of its GLP-1 diabetes and obesity treatments. The company’s operating profit rose by 18%, reflecting the high demand for these therapies. With the GLP-1 market expected to expand rapidly in the coming years, Novo Nordisk is well positioned to capitalize on this growth with projected sales growth of 22-28% for 2024.
Hims & Hers Health continues to disrupt the health and wellness space with its accessible and affordable services. The company reported a 52% YoY increase in revenue for Q2 2024, driven by a 43% growth in subscribers. The company’s updated full-year revenue guidance, now projected to be between $1.37 billion and $1.40 billion, underscores its accelerating momentum.
GLP-1 drugs are a recent addition to HIMS product suite, so it may take some time to see the results in its earnings reports. However, HIMS business is thriving without it, so it should only add to these strong results. It should also be noted that HIMS has the best one-year stock performance, but also the richest relative valuation.
Should Investors Buy LLY Stock?
Eli Lilly stock has demonstrated impressive relative strength during recent market volatility, making it a standout stock among this group and the broad market. While its competitors, Novo Nordisk and Hims & Hers Health have not held up quite as well in this market, they are also worthy investment considerations.
For investors looking to increase their exposure to the exciting GLP-1 trend, Eli Lilly may be the next addition to their portfolio.