Eli Lilly’s Path to the Next Trillion Market Capitalization

Key Points

• Eli Lilly is a global pharmaceutical giant known for its blockbuster GLP-1/GIP agonists type 2 diabetes and obesity drugs, Mounjaro and Zepbound.
• Eli Lilly crushed Q2 2024 EPS estimates by $1.19 and revenues by $1.34 billion, raising its full-year 2024 guidance.
• Eli Lilly is developing a triple-agonist weight loss drug, Retatrutide, which resulted in a mean body weight reduction of 24.2% after 48 weeks compared to just 15% for Ozempic.

Eli Lilly and Co. NYSE: LLY is a pharmaceutical giant that's made headlines for its GLP-1/GIP weight loss drug Tirzepatide, known as Mounjaro for type 2 diabetes, and Zepbound for obesity. Its stock is trading back near its all-time high at $972.52. Its market capitalization hovers around the $857 billion mark. The company has many growth drivers that will send its market cap through 1 trillion and more. Despite a 63% year-to-date (YTD) gain, the future holds much more upside, especially as Tirzepatide continues to find new indications for usage, thereby expanding the label and growing its user base.

Eli Lilly operates in the medical sector, competing with big pharma giants Novo Nordisk AS NYSE: NVO, Pfizer Inc. NYSE: PFE, and Amgen Inc. NASDAQ: AMGN.

Eli Lilly's Tirzepatide Continues To Win the Battle of the Bulge

Lilly’s blockbuster Tirzepatide continues to edge out Novo Nordisk’s Semaglutide drugs Ozempic and Wegovy when measuring weight loss potential. Tirzepatide has proven to be more effective since it mimics 2 hormones: GLP-1, which provides the feeling of being full, and glucose-dependent insulinotropic polypeptide (GIP), which lowers blood sugar by releasing more insulin into the bloodstream.

In an 84-week study, patients taking Tirzepatide lost an average of 26.6% of their body weight. Tirzepatide has repeatedly been proven to be more effective than Semaglutide, indicating patients were twice as likely to lose 10% and 3X more likely to lose 15% of their body weight than Semaglutide.

Tirzepatide Has More Benefits 

In addition to weight loss, Tirzepatide has been shown to be effective in lowering cholesterol and blood pressure levels. It has also been shown to improve cardiovascular risk factors because of its effects on weight loss and blood pressure. Lilly is trying to expand the indications for Tirzepatide to include more medical conditions like sleep apnea, non-alcoholic steatohepatitis (NASH), aka fatty liver, and metabolic dysfunction-associated steatohepatitis (MASH). Additional indications that trigger due to obesity include hypertension, stroke, and kidney disease. It's also being considered in treating Alzheimer's and Parkinson's disease.

A 176-week SURMOUNT-1 Phase 3 study of pre-diabetic adults indicated that Mounjaro reduced the risk of developing type 2 diabetes by 94%. It also sustained weight loss over the 3-year treatment period. Obesity is a chronic disease that can enable multiple complications to form.

Lilly Has a Bunker Buster Weight Loss Drug in the Pipeline

While Tirzepatide is proving to be a blockbuster, Lilly is already developing its next-gen weight loss drug that will target 3 hormones: GLP-1, GIP and glucagon (GCG). Retatrutide is a triple agonist that has already completed Phase 2 trials with unprecedented success. Patients saw a mean weight reduction of 24.2% after 48 weeks, the most of any drug to date. Ozempic patients had an average of just 15% after 48 weeks. Lilly’s own Zepbound produced an average weight loss of 20.9% after 48 weeks. Phase 3 trials will continue until the end of 2025 on a much larger sample size.

LLY Stock forms V-Bottom

The daily candlestick chart for LLY formed a classic V-bottom pattern. LLY sold off from all-time highs at $966.10 (lip line) on July 15, 2024, to a low of $747.55 on Aug. 5, 2024. LLY surged higher followings its spectacular Q2 2024 earnings release, initially surging 9.5% the following day, rising $73.17 to $845.31. LLY proceeded to claw higher until it retested the lip line on Aug. 20, 2024, and reached a new all-time high at $972.53 on Aug. 22, 2024. The daily relative strength index (RSI) rallied to the 65-band and has gone flat. Pullback support levels are at $902.64, $878.50, $825.24 and $786.58.  

Eli Lilly: Knocking the Ball Straight Out of the Ballpark

Eli Lilly posted Q2 2024 EPS of $3.92, crushing consensus analyst expectations by $1.19. Revenues surged 36% YoY to a whopping $11.3 billion, crushing consensus estimates for $9.96 billion by $1.34 billion. Revenues were driven by a 27% increase in volume and a 10% increase in realized prices, partially offset by a 1% decrease from FX. Volume increases were driven by Mounjaro and Zepbound (diabetes and obesity drugs), Verzenio for metastatic breast cancer, Taltz for plaque psoriasis, and Jardiance for type 2 diabetes and chronic kidney disease. Trulicity sales fell 31% YoY.

Raising the Bar and Guidance Higher: Eli Lilly's Success

Eli Lilly raised its full-year 2024 EPS to $16.10 to $16.60, up from previous guidance of $13.50 to $14.00 versus $13.68 consensus analyst estimates. Full-year 2024 revenues are expected to be between $45.4 billion and $46.6 billion, up from $42.4 billion to $43.6 billion in previous guidance, versus $42.93 billion consensus estimates.

Eli Lilly CEO David Ricks commented, "Mounjaro, Zepbound and Verzenio led our strong financial performance in the second quarter as we advanced our manufacturing expansion agenda, and it is equally exciting to see the growth around the world of our medicines for cancer, neurological disorders and autoimmune diseases."

Ricks concluded, “We also recently received approval of Kisunla to help people with Alzheimer's disease, a moment that was decades in the making. Lilly's performance and progress in Alzheimer's, metabolic disorders and many other serious diseases highlight the tenacity, focus and capability of our scientists, clinicians, engineers, customer teams and collaborators."

Eli Lilly analyst ratings and price targets are at MarketBeat. There are 18 Wall Street analyst ratings on LLY stock, comprised of 16 Buys and 2 Holds. Consensus analyst price targets point to $956.88.