2023 might have been the year of tech, but Eli Lilly (NYSE:LLY) gave big pharma some representation among the gainers, and 2024 has kicked off for it in a similar fashion; the stock has added an 83% boost over the past 12 months, 8% of which has been added since the turn of the year.
The gains can be partly attributed to the company’s positioning in the weight loss drug space with the company gaining FDA approval in November for its Zepbound (tirzepatide) injection, the first and only obesity treatment of its kind that activates both GIP (glucose-dependent insulinotropic polypeptide) and GLP-1 (glucagon-like peptide-1) hormone receptors. The company already sells tirzepatide as a treatment for type 2 diabetes, on the market under the brand name Mounjaro.
With the company’s Q4 earnings coming up soon (February 6), Wells Fargo analyst Mohit Bansal expects another strong quarterly readout for Mounjaro although possibly with a somewhat muted outlook.
“We see positive momentum for Mounjaro with another beat likely during 4Q earnings, but we see risk into initial ’24 guide, as LLY may not guide to maximum sales that they can supply for Mounjaro/Zepbound in 2024,” the analyst explained.
The possibility for a tepid guide is certainly not out of the question as that was the case last year. The initial 2023 guide suggested ~$2.5 billion in Mounjaro sales against higher buyside expectations. The Street’s outlook for 2024 calls for sales of $39.1 billion and adj. EPS of $12.34, figures that look “achievable” to Bansal. As mentioned, in similar fashion to last year, the analyst thinks LLY may “guide conservative” again. That should not cause much concern, however. “If this is the case,” says the analyst, “we wouldn’t overly read into it and could see buying on weakness.”
So, ultimately, what’s the verdict here? Bansal maintained an Overweight (i.e., Buy) rating on the shares, and on the prospects of higher Mounjaro numbers, his price target is raised from $650 to $700, implying the stock could deliver returns of ~10% a year from now. (To watch Bansal’s track record, click here)
Most analysts agree with the Wells Fargo stance; while 2 prefer to currently sit this one out, they are outnumbered by 16 Buys, all coalescing to a Strong Buy consensus rating. However, considering the ongoing share gains, the $662.81 average target leaves room for a modest upside of 4%. (See Eli Lilly stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
