One of the hottest trends in society is the emergence of weight loss drugs. It's no secret that millions of Americans are clinically obese. It's also no surprise that obesity can lead to a number of health problems.
One of the health problems with the strongest link to obesity is Type 2 diabetes. In 2023, the U.S. Food & Drug Administration (FDA) approved drugs for Type-2 diabetes and weight management. The companies that received these approvals are already seeing billions of dollars in sales.
But this is just the tip of a very large iceberg. The global weight loss drug market is projected to grow between $150-$200 billion by 2030. And that may be too conservative.
In this special presentation, we're giving you the names of seven stocks that can help you capitalize on this weight loss craze. You'll get the names of the two companies that are already profiting from their approved weight loss drugs. And if pharmaceutical stocks are not your thing, you'll also get a few stocks that give you a different way to play this ongoing craze.
Quick Links
- Novo Nordisk
- Eli Lilly
- Pfizer
- WW International
- Herbalife
- Nike
- Planet Fitness
#1 - Novo Nordisk (NYSE:NVO)
Novo Nordisk (NYSE:NVO) needs to be on any list of stocks that can help you profit from the weight loss craze. The maker of Ozempic and Wegovy has seen their obesity care sales increase by 174% through the first nine months of 2023. Ozempic generated $3.4 billion in sales.
It’s important to note that while Ozempic and Wegovy are used synonymously, there are key differences. Ozempic is intended to treat Type-2 diabetes. Wegovy is approved for weight loss. However, Wegovy, like Ozempic, does use semaglutide as its active ingredient.
Not surprisingly, NVO stock is up over 200% for the year. At around $105 a share in late December 2023, the stock is hitting some resistance. However, the Novo Nordisk analyst ratings on MarketBeat give the stock a Moderate Buy rating with a price target of $115.
That outlook is based on the likelihood of more competition in this space. However, if that competition is slow to emerge, NVO stock may have a longer runway.
About Novo Nordisk A/S
Novo Nordisk A/S, together with its subsidiaries, engages in the research and development, manufacture, and distribution of pharmaceutical products in Europe, the Middle East, Africa, Mainland China, Hong Kong, Taiwan, North America, and internationally. It operates in two segments, Diabetes and Obesity Care, and Rare Disease.
Read More - Current Price
- $85.00
- Consensus Rating
- Buy
- Ratings Breakdown
- 6 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $150.40 (76.9% Upside)
#2 - Eli Lilly (NYSE:LLY)
Eli Lilly and Company (NYSE: LLY) is another company that is making noise in the weight loss drug sector. Lilly’s entrant is Mounjaro. Originally approved by the FDA as a treatment for Type 2 diabetes, Mounjaro received approval as a weight loss drug in November 2023.
So far, the results are promising. A study shows that Mounjaro is more effective for weight loss than Ozempic. One of the highlights of the study is that uses without Type-2 diabetes lost more weight. That may be one reason the study is being contested by Novo Nordisk since Ozempic is first and foremost for treatment of Type-2 diabetes.
LLY stock is up 55% in 2023. The Eli Lilly analyst ratings on MarketBeat give the stock a Moderate Buy rating with a 2% upside. However, that price target may not fully reflect the expectation for over 90% earnings growth in the next 12 months.
About Eli Lilly and Company
Eli Lilly and Company discovers, develops, and markets human pharmaceuticals worldwide. The company offers Basaglar, Humalog, Humalog Mix 75/25, Humalog U-100, Humalog U-200, Humalog Mix 50/50, insulin lispro, insulin lispro protamine, insulin lispro mix 75/25, Humulin, Humulin 70/30, Humulin N, Humulin R, and Humulin U-500 for diabetes; Jardiance, Mounjaro, and Trulicity for type 2 diabetes; and Zepbound for obesity.
Read More - Current Price
- $767.76
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 17 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $1,002.22 (30.5% Upside)
#3 - Pfizer (NYSE:PFE)
Pfizer Inc. (NYSE: PFE) does not have a weight loss drug that has been approved by the FDA. Still, the company is a company to watch in this space.
In December 2023, Pfizer pulled its twice-daily obesity pill, danuglipron, on concerns of too many side effects. However, Pfizer remains optimistic it may be able to get danuglipron approved as a once daily pill. Industry analysts believe that a weight loss drug in pill form may be a game changer for Pfizer since Mounjaro and Wegovy both require injections.
Another reason to own PFE stock right now is that it is historically undervalued. At just over $28 per share as of December 26, 2023, the stock is just above its 52-week high. It trades at a forward price-to-earnings (P/E) ratio of around 18x.
In addition to a potential weight loss drug, the company has over a dozen drugs that could get approval in the next 18 months. And while you wait for those approvals, the company pays an attractive dividend that currently has a 5.77% yield.
About Pfizer
Pfizer Inc discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products in the United States, Europe, and internationally. The company offers medicines and vaccines in various therapeutic areas, including cardiovascular metabolic, migraine, and women's health under the Eliquis, Nurtec ODT/Vydura, Zavzpret, and the Premarin family brands; infectious diseases with unmet medical needs under the Prevnar family, Abrysvo, Nimenrix, FSME/IMMUN-TicoVac, and Trumenba brands; and COVID-19 prevention and treatment, and potential future mRNA and antiviral products under the Comirnaty and Paxlovid brands.
Read More - Current Price
- $26.36
- Consensus Rating
- Hold
- Ratings Breakdown
- 7 Buy Ratings, 9 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $32.14 (21.9% Upside)
#4 - WW International (NASDAQ:WW)
WW International Inc. (NASDAQ: WW) is best known as Weight Watchers. WW stock pushed over 30% higher in December, but not on expectations of 2024 New Year's resolutions. Rather, the company is developing a behavior change program geared for the specific needs of individuals who are using one of the weight loss drugs from Novo Nordisk or Eli Lilly.
In announcing the program, Weight Watchers acknowledges that these individuals face unique nutritional challenges, specifically as it relates to “protein and nutrient-dense foods as well as hydration.” The program offers daily nutritional and activity targets as well as other specific targets.
The program was announced shortly after Weight Watchers spokesperson, Oprah Winfrey, announced she is currently using a weight loss drug. WW International analyst ratings on MarketBeat give the stock a Moderate Buy rating with an $11.67 price target which is 25% higher than the closing price on December 26, 2023.
About WW International
WW International, Inc provides weight management products and services worldwide. It offers a range of nutritional, activity, behavioral, and lifestyle tools and approaches products and services. The company also provides various digital subscription products to wellness and weight management business, which provide interactive and personalized resources that allow users to follow its weight management program through its app and web-based platform; and allows members to inspire and support each other by sharing their experiences with other people on weight health journeys.
Read More - Current Price
- $1.34
- Consensus Rating
- Hold
- Ratings Breakdown
- 3 Buy Ratings, 2 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $4.50 (235.8% Upside)
#5 - Herbalife (NYSE:HLF)
In a similar vein to Weight Watchers, Herbalife Ltd. (NYSE: HLF) is an indirect beneficiary of the weight loss drug craze. Weight management is a core piece of the company’s business model. The company offers a range of products including meal replacement products, protein shakes, dietary and nutritional supplements and energy drink products.
HLF stock is up 2.49% after giving up much of the 27% gain it made between May 31 and August 31. The gain was largely due to higher projected sales of its weight management products. Unfortunately, a miss on revenue in its most recent quarter may have investors questioning those claims.
Herbalife analyst ratings on MarketBeat give the stock a Hold rating with a price target of $15.75. That’s low single-digit growth that may not account for expectations of 61% growth in earnings over the next 12 months.
With short interest over 13% and institutional ownership being light, retail investors should approach HLF stock with caution. But with the stock trading below $15 a share, it could offer risk-tolerant investors an opportunity for growth.
About Herbalife
Herbalife Ltd. provides health and wellness products in North America, Mexico, South and Central America, Europe, the Middle East, Africa, China, and the Asia Pacific. It offers products in the areas of weight management; targeted nutrition; energy, sports, and fitness; outer nutrition; and literature and promotional items.
Read More - Current Price
- $6.48
- Consensus Rating
- Hold
- Ratings Breakdown
- 2 Buy Ratings, 2 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $9.90 (52.8% Upside)
#6 - Nike (NYSE:NKE)
If you’re uncomfortable investing in pharmaceutical stocks, there are other angles to play that allow you to profit from the weight loss craze. One of those is to invest in fitness stocks. Nike, Inc. (NYSE: NKE) is one stock to watch closely. NKE stock is down 7.6% as 2023 comes to a close, but the stock is up nearly 20% in the last three months.
Trading at around 29x forward earnings, Nike is considered a premium stock. That hasn’t been a problem for the company until recently. Now investors are wondering if the company’s best days are behind it as the shoe market continues to become more competitive.
However, Nike still dominates the China market, but some investors are discounting that angle as growth in China remains sluggish.
The company has successfully pivoted to a direct-to-consumer model, they have a strong balance sheet and offer investors a safe, albeit not particularly impressive, dividend with a 1.37% yield.
About NIKE
NIKE, Inc, together with its subsidiaries, designs, develops, markets, and sells athletic footwear, apparel, equipment, accessories, and services worldwide. The company provides athletic and casual footwear, apparel, and accessories under the Jumpman trademark; and casual sneakers, apparel, and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron, and Jack Purcell trademarks.
Read More - Current Price
- $76.94
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 15 Buy Ratings, 14 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $89.77 (16.7% Upside)
#7 - Planet Fitness (NYSE:PLNT)
Finally, investors looking to profit from the weight loss craze can look at Planet Fitness Inc. (NYSE: PLNT). The company is one of the last brands standing after the Covid-19 pandemic ravaged the industry.
One of the purported benefits of weight loss drugs is the ability to lose weight without exercise. Still, whether individuals choose to use weight loss drugs or not, exercise is still a key component to a healthy lifestyle.
What has helped save Planet Fitness is its business model which includes affordable monthly fees as low as $10. The beginning of a new year is a time when many individuals take up a new fitness habit. Not surprisingly, the company’s fourth quarter is usually its largest in terms of revenue.
At 33x forward earnings, it’s fair to wonder if PLNT stock is overvalued. This may be more of a trade than an investment. But if you’re looking to get your trading year off to a good start, PLNT stock may be worth a close look.
About Planet Fitness
Planet Fitness, Inc, together with its subsidiaries, franchises and operates fitness centers under the Planet Fitness brand. The company operates through three segments: Franchise, Corporate-Owned Stores, and Equipment. The company is involved in franchising business in the United States, Puerto Rico, Canada, Panama, Mexico, and Australia.
Read More - Current Price
- $99.26
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $94.00 (5.3% Downside)
Investing can sometimes be as easy as riding the trend. The weight loss craze is not going to subside anytime soon. There's simply too much money to be made. And pharmaceutical companies are not going to leave the playing field for the existing players. In the next couple of years, there will be several more companies attempting to bring weight loss treatments to market.
That being said, many industries have been created in an effort to help individuals lose weight. The Peloton craze of 2019 became an outright mania in 2020. Lululemon has created an entire industry around the concept of athleisure.
Neither of those companies are on this list. But both companies show that there are many stocks in addition to the seven on this list that offer a way to play this trend.
More Investing Slideshows:
