Lilly overtakes larger rival Pfizer in market cap as shares continue to soar

Like a kite that has caught a stiff breeze, Eli Lilly and Co. stock is having the ride of its life. Shares in the Indianapolis-based drugmaker have soared 41% in the past 52 weeks, to about $331 each.

Lilly, as a company, is now worth more than rival Pfizer Inc., according to its market cap—$314.2 billion for Lilly versus $296.5 billion for Pfizer. That’s despite the fact that Pfizer is nearly three times as large as Lilly in annual sales.

But can Lilly’s shares keep riding high indefinitely?

According to some analysts, Lilly shares have just begun to rise. On Friday, Morgan Stanley named Lilly a “top pick” and predicted shares could reach $395 within a year—or an upside of an additional 20%.

Analyst Terence Flynn gave the stock an “overweight” rating and told clients Lilly would get a boost over the next several years from a “robust” new line of products—notably Mounjaro, a new therapy Lilly recently launched for type 2 diabetes that has also shown potential to help obese people to lose weight. (The weight-loss indication, however, has yet to be submitted to federal regulators for approval.)

Morgan Stanley was just the latest investment bank to raise its price target on Lilly. On Thursday, Barclays increased it price target on Lilly shares to $355 and gave the stock an “overweight” rating, according to MarketBeat.com.

Last week, an analyst from Motley Fool gave Lilly a full-throated endorsement, saying the company continues to innovate with new medicines for diabetes, and has a raft of experimental drugs in its pipeline for cancer, immunology and Alzheimer’s disease.

“There aren’t many big-name companies in the pharmaceutical industry that have been bigger winners than Eli Lilly in the past year,” Motley Fool contributor Prosper Junior Bakiny wrote.

Of the 22 analysts following Lilly, four have a strong buy recommendation, nine have a buy recommendation, eight have a hold recommendation, and only five have an underperform recommendation, according to Yahoo Finance.

The biggest lift for Lilly, according to analysts, is Monjouro, the new diabetes drug, which JP Morgan analyst Chris Schott recently said could hit peak sales of $20 billion for both diabetes and obesity (the latter possibly under a different brand name; the generic name for both is tirzepatide).

But some analysts are remaining cautious. Edmund Ingham of Seeking Alpha said Lilly appears strong in all areas, but is facing too many commercialization risks.

“Tirzepatide is a huge opportunity, but physicians still need to be convinced that diet pills are better than lifestyle adjustments when it comes to treating obesity or even diabetes,” he wrote on June 24.

So how fast is Monjouro taking off? It’s hard to get a read on prescriptions this early. Lilly will report sales for Monjouro and all other products when it releases second-quarter earnings on Aug. 4.