1. Eli Lilly And Company (NYSE:LLY)
Number of Hedge Funds Investors: 106
Jim Cramer in a latest program on CNBC called Eli Lilly And Co (NYSE:LLY) sellers “uninformed” and urged investors to look forward instead of analyzing 2024 numbers.
“I care about demand more than I care about what these numbers are indicating. Let them—I look at it almost as you would on a trading desk. Let them sell it, let the uninformed people sell it, and then look at the size of this market. Realize that we’re in its infancy, and its infancy is already so much bigger than any drug I’ve ever seen. I think you have to be on the horse that is Eli Lilly.”
Lilly has been making progress in its GLP-1 opportunity and also advancing in other areas like immunology and oncology. The company has several growth products that help reduce its reliance on incretin-based drivers. Wall Street has raised expectations for the total addressable market of weight loss drugs. The company’s potential late 2025 regulatory submission for its oral GLP-1 weight loss drug, Orforglipron, could give it an edge over Novo’s next-generation product, with possible commercialization in 2026 that might further erode Wegovy’s market share.
LLY’s forward non-GAAP P/E of 35x is nearly double that of its sector peers, but it’s still more than 10% below its five-year average.
Alger Spectra 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 with core franchises in diabetes, obesity, neurology, and oncology. Its portfolio includes innovative drugs like Mounjaro, Zepbound, Trulicity, Jardiance (diabetes and obesity), Taltz (psoriasis), Emgality (migraines), and Verzenio (breast cancer). Shares detracted from performance during the quarter after the company reported fiscal third-quarter revenues below analyst estimates. The revenue shortfall was attributed to inventory destocking in the wholesaler channel for Mounjaro and Zepbound, following inventory building in the prior quarter, which led to an 11% miss in obesity drug revenues. Management slightly lowered fiscal 2024 guidance but emphasized that demand for its obesity drugs remains strong. They also moderated promotions during the quarter to manage supply and ensure patient continuity. While shares detracted from performance, we believe the revenue miss was largely due to temporary inventory dynamics and moderated promotion activity.”
While we acknowledge the potential of Eli Lilly And Co (NYSE:LLY), our conviction lies in the belief that under the radar 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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