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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe stock markets are closed today for Presidents Day, a move that gives Eli Lilly and Co. stock a moment to catch its breath after a run-up of 138% in the past 52 weeks.
Shares in the Indianapolis-based drugmaker are setting new records almost every day, due to investor excitement over the company’s new drugs for obesity and diabetes, two health conditions that plague America.
The value of Lilly’s outstanding shares (or market cap) was worth $742.4 billion at the close of trading on Friday. And lately, some outside financial experts are wondering whether Lilly could break through the $1 trillion level.
The company’s shares, traded under the ticker LLY, are on track to do just that within weeks or months in the absence of bad news that could tank the stock.
“Could LLY be the first $1 trillion biopharma stock?” Morgan Stanley analyst Terence Flynn wrote in a report on Friday.
Flynn raised his target on Lilly shares from $805 to $950, meaning the price he believes the shares will be trading at 12 months from now. In response, investors went on a buying spree. Lilly shares shot up $24.28, or 3.2%, that day in heavy trading, closing at $782.06.
Although the stock is already in record territory, with huge gains in recent months, Flynn said he sees much more room for growth.
“We continue to see a path for further upside,” he wrote to clients.
Already, Lilly is the most valuable pharmaceutical health care company in the world, surpassing larger companies such as Pfizer and Johnson & Johnson. But now Lilly stock is pushing a realm populated by only a handful of publicly traded companies, including Microsoft, Apple, Amazon, Meta, Alphabet and Tesla.
What is driving the excitement is strong demand for Lilly’s drugs for diabetes (Mounjaro) and weight loss (Zepbound), which have reported stronger than expected sales. Lilly has said demand has made it difficult to fill orders and has led to delays. The company is spending billions of dollars on new manufacturing capacity to keep up.
Of the 22 analysts who follow Lilly, 14 have a “buy” or “strong buy” rating on the stock, and eight have a “hold” rating, according to Yahoo Finance.
Jeffries analyst Abash Tewari wrote to clients on Feb. 13 he remains bullish on Lilly, because the company has an “attractive growth profile in a recessionary environment” and the company’s drugs for weight loss and diabetes, known an GLP-1 drugs.
“We’re bullish on GLP-1 and see it as one of the biggest drug classes of all time,” he wrote.
Meanwhile, Lilly’s pipeline is also full of experimental drugs in late-stage development, including treatments for cancer, ulcerative colitis and Alzheimer’s disease, Motley Fool analyst Prosper Junior Bakiny pointed out.
“Eli Lilly’s rich pipeline,” he wrote, “should allow for significantly more clinical and regulatory processes in the next five years.”
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One word; bubble.