Pharmaceutical Powerhouse: Why Eli Lilly’s Stock is a Compelling Buy
Eli Lilly (NYSE: LLY) has been on a tear in 2024, with its stock price soaring 58% year-to-date. The company’s success in the diabetes and obesity care markets, thanks to its blockbuster GLP-1 agonists Mounjaro and Zepbound, has been a major contributor to this growth. However, another significant development has flown under the radar, making now an attractive time to invest in Eli Lilly.
Breaking Down the Eczema Opportunity
In September, Eli Lilly received FDA approval for its atopic dermatitis medication Ebglyss, an injectable treatment for moderate-to-severe eczema. This condition affects 16.5 million adults in the US, with approximately 40% experiencing debilitating symptoms such as itchiness, dry skin, and rashes. The global eczema treatment market is projected to reach $31.4 billion by 2034, with North America being the largest market.
A Closer Look at Eli Lilly’s Valuation
At first glance, Eli Lilly’s price-to-earnings (P/E) ratio of 113 may seem steep. However, upon closer inspection, it becomes apparent that the company’s P/E ratio has rebounded to its six-month high despite concerns over pricing protocols and competition in the weight loss market. This suggests that investors are undervaluing Eli Lilly’s opportunities in Alzheimer’s disease, eczema, and artificial intelligence (AI).
Why Eli Lilly’s Stock is a Buy
Eli Lilly’s eczema approval marks another milestone in the company’s journey to build a prolific pharmaceutical operation. With its diversified portfolio and massive opportunities outside of weight management, the stock appears underpriced. Long-term investors would be wise to consider adding Eli Lilly to their portfolios, as the company’s growth is only just beginning.
The Bottom Line
Eli Lilly’s stock has been on a remarkable run in 2024, driven by its success in diabetes and obesity care. However, the company’s recent eczema approval and undervalued opportunities in other areas make it an attractive buy for long-term investors. With its diversified portfolio and potential for massive returns, Eli Lilly’s stock is a compelling addition to any investment portfolio.
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