Is Now Too Late to Invest in Eli Lilly?

Eli Lilly (NYSE: LLY) stock has risen 125% in a year. Large pharma company has become one of the heaviest-weighted S&P 500 shares, joining tech giants like Nvidia and Apple. Indeed, this drugmaker with double-digit revenue growth is becoming a growth stock.

Why is Lilly hot now? The company sells dieting medications, a popular product. Not just any weight-loss pills. Lilly sells GIP and GLP-1 receptor agonists. As they help people lose weight, Mounjaro and Zepbound are generating huge profits. That sounds great, but Lilly's gains may make you worry if it's too late to buy this high-growth pharma stock. Find out.

Let's start with the full Eli Lilly bundle. The huge pharma company sells diabetes, immunology, and neurology medications. New and "growth products" from Lilly are increasing revenue. New product revenue rose more than $2.1 billion and growth product revenue rose 9% in the last quarter.

While some growth products' patents expire in the coming years, others are secured until later this decade and beyond. This illustrates that Lilly's growth isn't limited to outdated treatments or one product, but to a wide range of drugs that can enhance the top line in the future. Over $9.3 billion in quarterly revenue came from Lilly's pharmaceuticals, up 28%. This enabled the corporation increase net profits by double-digits to almost $2.1 billion.

Several products are contributing to Lilly's strong performance. However, Lilly's weight reduction medications based on tirzepatide are its crown jewels, and this may persist for some time. Mounjaro, authorized for type 2 diabetes, has seen remarkable increases as doctors prescribe it for weight loss. About $5 billion was earned last year.

Possible blockbuster Later this year, regulators approved Zepbound for weight loss, and in its first few weeks on the market, it produced $175 million, indicating that it will join Mounjaro as a blockbuster drug.

These and Novo Nordisk's medicines have seen rising demand, forcing the businesses to increase output. This momentum may continue. The worldwide weight reduction medicine industry may grow 16-fold to $100 billion by 2030, according to Goldman Sachs Research.

Lilly continues to sell two top medications, but it's not complacent. It's testing a pill-based weight loss contender, as its current medications are injectables. Phase 2 data was positive last year. The candidate helped adults lose 14.7% of their weight after 36 weeks.

Lilly is also studying retatrutide, which may be more effective than its current medications. Mounjaro and Zepbound affect digestive hormones GIP and GLP-1. Retatrutide affects two of those and a third hormone. Retatrutide reduced weight 17.5% in 24 weeks in phase 2 studies.

A high appraisal Even while everything sounds great, is it too late to acquire Lilly stock? The stock trades at 62x forward earnings forecasts, which is high for a drug company. However, the company's long-term growth potential over the next five to 10 years must be considered. Forward P/E is short-term because it uses next-year earnings predictions.

Due to the projection for global demand and Lilly's research and development activities that could lead to better products in the future, its weight loss market growth may just be beginning. Lilly's rise is also driven by other medications, as indicated above. Long-term investors can still buy shares of this leading pharmaceutical company.

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