8. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 100
Eli Lilly and Company (NYSE:LLY) stands out as one of the best growth stocks in the healthcare sector owing to the vast sales potential for weight loss treatments. It is one of the biggest players in the industry, backed by the blockbuster drug Tirzepatide, which has been approved for treating obesity.
While Eli Lilly and Company (NYSE:LLY) generated $1.2 billion in sales from Zepbound in the second quarter, it is also working on other next-generation candidates that should strengthen its prospects in the industry. Mounjaro is another flagship weight loss drug cementing the company’s prospects, generating $3.1 in sales in the second quarter.
The two drugs, Mounjaro and Zepbound, sold under Tirzepatide, can generate as much as $25 billion in peak sales, allowing the company to generate significant shareholder value.
Thanks to strong demand for weight loss drugs, Eli Lilly and Company (NYSE:LLY) posted a 36% year-over-year increase in second-quarter revenue totaling $11.3 billion. Its net income totaled $3.5 billion, 86% higher than in Q2 2023.
LLY is already looking into the future as it proceeds with the development of orforglipron and retatrutide, which are projected to bring in more than $1 billion in revenue annually by the year 2030. Furthermore, the company is in the process of gaining regulatory approval for its once-weekly insulin medication, which could be ready within the next couple of years.
Eli Lilly and Company (NYSE:LLY) also recently achieved a significant regulatory milestone with the FDA’s approval of Kisunla, known by its generic name donanemab, as a treatment for Alzheimer’s disease.
While the company pays a partial 0.58% dividend yield, it is essential to note that it has increased by 101.6% over the past five years. Consequently, as the company generates more revenues from its weight loss drugs, it should pay more dividends. Eli Lilly and Company (NYSE:LLY) is rated as a Buy on Wall Street with an average price target of $1,050.65, implying a 14.02% upside potential from current levels.
Eli Lilly and Company (NYSE:LLY) was a part of 100 hedge fund portfolios at the end of Q2 2024, down from 109 in the previous quarter, as per Insider Monkey’s database. Fisher Asset Management owned the largest stake in the company, worth over $4.4 billion.
Here is what PGIM Jennison Health Sciences Fund said about Eli Lilly and Company (NYSE:LLY) in its Q2 2024 investor letter:
“Eli Lilly and Company (NYSE:LLY) is a diversified biopharmaceutical company with core franchises in Diabetes, Obesity, Immunology, Neurodegeneration, and Oncology. The company is one of the two global leaders in diabetes with blockbuster products in Trulicity and recently launched Mounjaro (tirzepatide) to serve this large underserved market. To date, the Mounjaro launch is the strongest for any diabetes drug ever launched, which we attribute to off label usage in the obesity indication as well as on label use in diabetes. We believe the tirzepatide (the generic name for Mounjaro) franchise is also uniquely positioned to grow substantially from here thanks to its recent approval for obesity. To that note, in late 2023, Eli Lilly received approval for tirzepatide in obesity and is commercializing it for obesity under a new brand name, Zepbound. While still early in the launch, uptake has been extremely strong, exceeding that of both Wegovy and Mounjaro at the same timepoint in their launches. While Alzheimer’s Disease has been a tough market for drug developers, Eli Lilly has breakthrough designation from the food and drug administration (FDA) for donanemab and recently presented Phase III pivotal trial data that positions donanemab as the most efficacious drug in the class. In June, the FDA advisory committee voted unanimously in favor of donanemab as an effective treatment where the benefits outweigh the risks, praising the therapy as innovative. Donanemab was then approved under the brand name Kisunla in early July. Eli Lilly also has exciting franchises in dermatology, immunology, and oncology that are starting to add meaningfully to growth. With a proven history of strong commercial execution and one of the highest research and development (R&D) success rates in the industry, we see opportunity for continued success. With a lack of meaningful patent expirations for the rest of the decade. Eli Lilly is uniquely positioned amongst its larger-cap peers. Recent positive performance has been driven by the continued strong growth of Mounjaro and Zepbound, which led to a big guidance raise on the 1Q call, an unusual action for Eli Lilly this early in the year, which speaks to their confidence in the strong trends they are seeing.”
