Opinions
Kevin Simpson
Eli Lilly & Co.
LLY-N
BUY
Jul 18, 2025
Stock price when the opinion was issued
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Premium contentThis big pharma company has a host of weight loss GLP-1 medications that it will soon release progress reports on later this month, some of which have already received approvals to develop. It trades at 27x forward earnings and supports a 77% ROE. We recommend setting a stop-loss at $703, looking to achieve $987 -- upside potential over 20%. Yield 0.7%
(Analysts’ price target is $987.22)Best among the weight-loss drugs, more effective than its peers. Also, the oral version will be a game-changer. LLY is gaining market share as its manufacturing ramps up. Shares are flat and need a catalyst, possibly on Aug. 7 with earnings. Their oncology platform is also doing well. He expects their revenues to double by 2030, based on 25-30% compounded growth.
A lot of the move down happened this week. Numbers were good -- earnings and revenue beat, guidance was good. Market really homed in on obesity pill disappointment (slightly less efficacy than a competitor's, 10% dropped out due to side effects). Now trades at 24x PE, with 19% growth.
Very cheap, but sentiment has become difficult and challenging. Long term, the demand for diabetes and obesity drugs is still there and will continue to grow. Industry-leading Alzheimer's drug in pipeline as well. Fortress-like balance sheet, really great cashflow.
Premium contentThere was a lot of hype in the weight-loss drugs, typical for a new drug (or technology). This and Novo Nordisk have recently fallen. The future asks, How will they monetize the GLP-1 franchise? An oral application, which will happen in time. Many moving parts in this industry. LLY's PE has fallen from 50x to 35x. Is a hold depending on your overall portfolio and other factors.
The catalyst would be if they can deliver an oral weight-loss drug and he expects so. He agrees with today's upgrade.