1. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 115
Eli Lilly and Company (NYSE:LLY) develops, manufactures, discovers, and sells pharmaceutical products. These products span oncology, diabetes, immunology, neuroscience, and other therapies. Investors are bullish on Eli Lilly and Company (NYSE:LLY) due to its in-demand GLP-1 drugs, used to treat diabetes and obesity, which are still in their early growth stages, and the company’s strong financials.
Eli Lilly and Company (NYSE:LLY) is a major player in the GLP-1 market and is making a significant investment in its experimental oral weight-loss drug, orforglipron, by accumulating nearly $550 million in pre-launch inventory ahead of its expected 2026 release. Since pharmaceutical companies usually build inventory relatively closer to regulatory approval for drugs, accumulating a strong pre-launch inventory reflects the company’s aim to make a strong market entry and gain an early advantage over competitors in the weight-loss treatment sector.
The company has strong fundamentals. It reported a 32% revenue growth in fiscal 2024 compared to fiscal 2023, exceeding its first-time guidance by $4 billion. Eli Lilly and Company (NYSE:LLY) also made substantial progress across its strategic deliverables in fiscal Q4 2024, with revenue growing by 45% in the quarter, supported by strong uptake of its Mounjaro and Zepbound drugs. Its immunology, oncology, and neuroscience segments are also performing well, supporting bullish sentiments for the stock.
Baron Health Care Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its Q4 2024 investor letter:
“Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical company best known for developing and selling GLP-1 medications for diabetes and obesity. Shares detracted from performance as recent GLP-1 revenue results missed heightened expectations. We view Lilly’s Mounjaro/Zepbound GLP-1/GIP drug as an important treatment for diabetic and non-diabetic obese patients and see Lilly continuing to innovate and develop more effective and convenient next-generation medications. Although manufacturing supply and access is limited in the near term, we think this class of drug should be the standard of care for both diabetes and obesity and will become a $150 billion category. We think the recent revenue miss related to the mistiming of demand-generation activities with supply increases and elevated investor expectations after a very strong result in the prior quarter. We think this market is in the early innings of uptake and the adoption of GLP-1s will triple Lilly’s total revenues by 2030.”
Overall, LLY ranks first among the best vaccine stocks to buy according to hedge funds. While we acknowledge the potential of vaccine stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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