2. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Investors: 100
Jim Cramer often praises Eli Lilly and Company (NYSE:LLY), believing it has the potential to become the first non-tech company to reach a trillion-dollar valuation. He compares Eli Lilly and Company (NYSE:LLY)’s potential to Costco’s success, noting that while Costco’s strength lies in its membership fees, Eli Lilly’s future growth is driven by its groundbreaking drugs for weight loss and diabetes.
“It’s why we constantly praise Eli Lilly because we believe this drug company can be the first non-tech stock to hit a trillion-dollar valuation. Costco’s lever is its membership dues; Lilly is all about the revolutionary weight loss and diabetes drug.”
Eli Lilly and Company (NYSE:LLY) is a prominent player in the pharmaceutical industry, driven by a robust portfolio and a promising pipeline. Eli Lilly and Company (NYSE:LLY)’s core drugs—Trulicity for type 2 diabetes, Taltz for psoriasis, and Verzenio for breast cancer—are key contributors to its substantial revenue growth. In addition, Eli Lilly and Company (NYSE:LLY)’s pipeline is notably strong, with potential blockbusters like tirzepatide, a treatment for both obesity and diabetes, showing impressive results in clinical trials.
One of Eli Lilly and Company (NYSE:LLY)’s most significant advancements is donanemab, an experimental drug for Alzheimer’s disease. Recent Phase 3 trial results have shown that donanemab can significantly slow cognitive decline in early-stage Alzheimer’s patients. If it receives approval, this drug could be a major revenue driver and solidify Eli Lilly and Company (NYSE:LLY)’s position as a leader in the Alzheimer’s treatment market, which has a significant unmet need.
Eli Lilly and Company (NYSE:LLY)’s financial performance is equally strong, with Q2 2024 revenues reaching $9.51 billion—a 28% increase from the previous year—thanks to robust sales of existing medications and successful new product launches. Eli Lilly and Company (NYSE:LLY) reported a net income of $2.12 billion, or $2.33 per share, exceeding analyst expectations. Eli Lilly and Company (NYSE:LLY)’s strong cash flow and balance sheet provide the resources for continued investment in research, development, and strategic acquisitions. Furthermore, Eli Lilly and Company (NYSE:LLY) has raised its full-year 2024 guidance, reflecting strong performance and confidence in its product portfolio and pipeline.
Eli Lilly and Company (NYSE:LLY) is also making strides in expanding its therapeutic areas. The successful launch of Mounjaro (tirzepatide) for diabetes and its potential approval for obesity are notable growth opportunities. Additionally, Verzenio’s continued success in oncology, supported by strong clinical data, underscores Eli Lilly and Company (NYSE:LLY)’s expanding influence in this field.
Strategically, Eli Lilly and Company (NYSE:LLY) has been active in enhancing its pipeline through acquisitions and partnerships. The recent acquisition of DICE Therapeutics, which focuses on oral treatments for autoimmune diseases, complements Lilly’s immunology portfolio. Partnerships in gene therapy and oncology are further accelerating the development of innovative therapies. Recent updates include plans to submit donanemab for regulatory approval in the U.S. and Europe, with potential market entry in 2025. Mounjaro has exceeded sales expectations, surpassing $1 billion in Q2 2024.
Baron Health Care Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its Q2 2024 investor letter:
“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.”
