Morgan Stanley’s Highest Conviction Stocks: Top 20 Stocks To Buy

11. Eli Lilly and Company (NYSE:LLY)

Share Price Upside: 20%

Number of Hedge Fund Investors In Q2 2024: 100

Eli Lilly and Company (NYSE:LLY) is one of the biggest healthcare companies in the world. Since 2023 start, its shares have gained a whopping 162%, and at the back of these gains is Eli Lilly and Company (NYSE:LLY)’s weight loss drug Mounjaro. One of the leading weight loss treatments in the market, Mounjaro and GLP-1 offerings in general have benefited Eli Lilly and Company (NYSE:LLY) due to their ability to manage tangential problems such as preventing pre diabetics from becoming diabetics. Eli Lilly and Company (NYSE:LLY)’s balance sheet shows that it holds $2.9 billion in cash and equivalents which allows it significant room to not only scale up the production of key assets like Mounjaro but also invest in other drugs. These include Eli Lilly and Company (NYSE:LLY)’s medicine for immune system problems called Tartz, its breast cancer medicine Verzenio, and its diabetes drug Trulicity. As it stares down the barrel of generics making an entry into the weight loss market, Eli Lilly and Company (NYSE:LLY) is busy conducting phase three trials for a low cost weight loss drug called Orforglipron.

Baron Funds mentioned Eli Lilly and Company (NYSE:LLY) in its Q2 2024 investor letter. Here is what the firm said:

“Shares of global pharmaceutical company Eli Lilly and Company 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.”