2. Eli Lilly and Company (NYSE:LLY)
Market Capitalization as of September 11: $810.25 Billion
Number of Hedge Fund Investors in Q2 2024: 100
Eli Lilly and Company (NYSE:LLY) fits the bill as one of the best defensive stocks to invest in as it discovers, develops, and markets human pharmaceuticals that are crucial to the survival of human beings. The company offers leading products for treating diabetes, arthritis, and ulcerative colitis, among other medical conditions.
While the stock is trading near all-time highs, the 770% rally over the past five years has come on the company enjoying tremendous success with its lead products for diabetes and weight loss, Mounjaro and Zepbound. The company’s competitive edge stems from the quality and effectiveness of its drugs, which allows it to spend less on sales and marketing to generate revenues.
For a long time, Eli Lilly and Company (NYSE:LLY) ‘s success has been largely dependent on its best-selling diabetes medication, Trulicity, for expansion. However, with the green light for Mounjaro for diabetes treatment and Zepbound for weight reduction, the company’s landscape has changed significantly.
Eli Lilly and Company (NYSE:LLY) saw its revenues increase by 36% in the second quarter, reaching a total of $11.3 billion in sales. The revenue from Trulicity amounted to $1.2 billion, which was less than a quarter of the $3.1 billion in sales achieved by Mounjaro. Lilly raised its full-year 2024 revenue guidance by $3 billion, to between $45.4 billion and $46.6 billion, affirming expected growth.
Eli Lilly and Company (NYSE:LLY)’s shares are certainly expensive while trading at a price-to-earnings multiple of 39. However, it commands a significant premium due to its leading position in the market for weight loss medications. Moreover, with the numerous diseases linked to obesity that tirzepatide can address, the potential for Eli Lilly’s stock to soar is limitless.
During Q2 2024, 100 hedge funds held stakes in Eli Lilly and Company (NYSE:LLY), totaling $16 billion. Fisher Asset Management emerged as the leading stakeholder, owning nearly 5 million shares.
Baron Funds, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Shares of global pharmaceutical company Eli Lilly and Company (NYSE:LLY) increased on continued investor enthusiasm around GLP-1 drugs for diabetes and obesity. We remain shareholders. Lilly’s Mounjaro/Zepbound not only offers superb blood sugar control for diabetics but can drive 20%-plus weight loss and likely improve cardiovascular outcomes in both diabetic and non-diabetic obese patients. Lilly is developing next generation drugs, including retatrutide, which drives approximately 25% weight loss, and orforglipron, a daily pill that produces approximately 15% weight loss. In the U.S. alone, there are 32 million Type 2 diabetics and an additional 105 million obese patients who we estimate would qualify for GLP-1 drugs. Although supply and access are limited near term, we think GLP-1 drugs will become standard of care for both diabetes and obesity and will become a $150 billion-plus category. We see Lilly setting a high efficacy bar and capturing significant long-term market share. We think the adoption of GLP-1s will drive Lilly to triple total revenue by 2030.”
