While much of the recent focus within the stock market has been placed on the AI trend, one stock in the pharmaceutical industry has been on a surge so far this year: Eli Lilly (LLY).
The stock sat at just $311/share at the start of March. And today, the stock sits at $452/share. But, what has contributed to this trend – and are there any signs suggesting it will slow down, or will Eli Lilly continue to climb higher and higher?
Some experts say that where the stock sits today is a historically high valuation level for the company. Much of this success can be attributed to continual investment in researching and developing new drugs – as many of the company’s efforts are just now coming to fruition.
Just over a decade ago, the company began facing the expiration of key patents. To combat the loss in revenue, Eli Lilly has been on a mission to uncover new opportunities – spending as much as 25% of revenue on R&D just last year alone. All this effort has led to the approval of major drugs that the company sees contributing to its balance sheet today.
These include diabetes drugs Mounjaor and Jardiance, Retevmo (an RET inhibitor that fights advanced or metastatic tumors), Olumiant (treats hair loss, rheumatoid arthritis, and COVID-10), and more. This isn’t even taking into consideration drugs that are on the path to approval, including Donanemab – a drug that could slow the horrific effects of Alzheimer’s by 35%.
In the most recent fiscal year, Eli Lilly produced a whopping $28.5 billion in revenue and $6.25 billion in net income. And in the current year, the company hopes to launch up to 4 new medicines for challenging diseases – which will continue to drive stock valuation higher and higher.
But, in looking at LLY purely from a stock analysis standpoint, does it make sense to buy today? We’ve taken a look through the VectorVest stock analyzing software to help you determine your next move. There are 3 things you should be aware of…
LLY Has Fair Upside Potential With Very Good Safety and Timing
The VectorVest system simplifies your trading strategy by giving you clear, actionable insights in just 3 ratings. These are relative value (RV), relative safety (RS), and relative timing (RT). Each rating sits on its own scale of 0.00-2.00, with 1.00 being the average.
Following this proprietary stock rating system helps you win more trades with less work. Simply pick stocks with ratings appreciating above the average. Or, better yet, follow the clear buy, sell, or hold recommendation VectorVest offers for any given stock, at any given time. As for LLY, here’s what we found:
- Fair Upside Potential: The RV rating offers a comparison of a stock’s long-term price appreciation potential to AAA corporate bond rates and risk - offering you a better perspective than a simple comparison of price to value alone. And right now, the RV rating is 0.95 - just below the average, but deemed fair nonetheless.
- Very Good Safety: In terms of risk, LLY has very good safety - with an RS rating of 1.34. This is calculated through a deep analysis of the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity.
- Very Good Timing: As you can see by looking at how LLY has trended over the past few months, the stock has very good timing. This is confirmed by the RT rating of 1.39. The rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s taken day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 1.26 is very good. Does that mean you should buy LLY today? Or, is there any reason to hold off on making this move? Don’t let this opportunity go by the wayside - get a clear answer on your next move and execute it with confidence by getting a free stock analysis at VectorVest today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. Right now, LLY has just fair upside potential - but very good safety and timing.
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