The shares enjoyed gains of 345% from levels of $170 in early January 2021 to around $755.
The Eli Lilly (LLY) stock They enjoyed phenomenal gains of 345% from levels of $170 in early January 2021 to around $755 now, against an increase of around 35% for the S&P 500 during this period of approximately three years.
This can mainly be attributed to a significant 236% increase in the company’s price-to-sales (PS) ratio to 21 times nowup from 6x in 2020. Investors rewarded LLY stock, given its strong pipeline potential, including its obesity drugs.
Admirably, They also outperformed the broader market in each of the last three years. Stock returns were 64% in 2021, 32% in 2022, and 59% in 2023. In comparison, S&P 500 returns were 27% in 2021, -19% in 2022, and 24% in 2023.
Eli Lilly: What is the long-term expectation?
Its valuation depends largely on the future potential of the project pipeline rather than its current earnings and, despite its big movement, the $800 average of analyst estimates is around 6% above its current market price.
Eli Lilly’s diabetes drug Mounjaro was approved by the US FDA in 2022 and is expected to make nearly $33 billion in annual sales by 2029. Zepbound, Eli’s obesity drug Lilly obtained its approval in November of last year, and is estimated to gross more than $16 billion in annual sales by 2029.
Overall, Eli Lilly is on track to deliver very strong sales growth in the coming years. The market for obesity drugs in particular is expected to increase 16-fold to exceed $100 billion by 2030.and will be largely dominated by Eli Lilly and Novo Nordisk.
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Eli Lilly: Is it worth investing?
While many of these positives are likely already priced in, LLY stock may continue an uptrend thanks to market share gains from its drugs and expected regulatory approvals.
When a stock rises so much, it is always a good idea to wait for the price to stabilize and see the buying opportunity. If they are “cheap”, they can be bought for long-term profits depending on the expectation of the company.
Source: Ambito
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