Stockchase Opinions

Paul Harris, CFA Eli Lilly & Co. LLY-N Unspecified Feb 24, 2025

He owns Novo but Eli Lilly is a great company in the sweet spot of an obesity drug and other drugs as well. It has done well for the last little while. Manufacturing drugs is not easy and takes lots of time from approval to production. It is a huge franchise and can grow quite a lot.

$881.400

Stock price when the opinion was issued

biotechnology pharmaceutical
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DON'T BUY

He, too, was looking at defensive healthcare names to avoid tariffs. But not this one. Earnings and cashflows have exploded on weight loss, but so has the valuation. Competitors are coming. Lots of pressure in US to reduce drug prices.

Consider ABT or ALC.

BUY

Owns this and competitor Nvo Nordisk, but prefers LLY. The weight-loss drugs have more potential than only weight loss, as they move from injectibles to pill form. The drug hasn't plateaued yet. It's the only drug stock that has performed like the Mag 7.

HOLD

He owns a small holding. Likes their growth profile from their weight-loss drug; they will continue to take market share from Novo Nordisk. The big news this week was that drug shortages were over. They lowered the price too. But shares are expensive at  20x PE on 2028 numbers--expensive for a pharmaceutical. It's had a big run, so he's not adding shares, but trimming.

BUY
Will invest $27 billion in manufacturing sites.

Like TJX, their momentum is not unwinding, and shares will push to new all-time highs. It's on a streak now, of 7 straight days, that we haven't seen in 2 years.

BUY

Her best performer this month, with revenues growing 40%. Excellent balance sheet, drug pipeline and managers. She just entered this and will buy on dips.

HOLD

This got expensive, so he reduced his holding at 50x PE, now at 35x. Is still overweight this, because he believes in the GLP franchise. Expects strong revenue growth over 2 years.

TOP PICK

Loves healthcare for value and defense. Diabetes and obesity drugs continue to drive sales. Other new drugs boost earnings growth forecast. Sees 25% upside from here. Ranks 10/10 on fundamentals. Yield is 0.72%.

(Analysts’ price target is $1001.48)
BUY

Hold both LLY and NOVO? No. Choose one or the other. LLY sells more diverse drugs and more North American focused.

BUY

It's one of the least-tariffed, least-dangerous stocks though the price is high. He sees upside.