You’d be hard-pressed to find a stock that’s shown positive growth over the past year – but Eli Lilly is one of them. The pharmaceutical developer & manufacturer has had a great year – up 35% in the last 365 days. Even looking at the bigger picture, this stock has been a high-performer. This is driven by the company’s strong earnings trend. Over the past 5 years, the stock is up 277% – and with the latest news of the new diabetes drug they’ve developed, it appears this trend will continue.
In fact, experts are claiming this could be one of history’s best-selling drugs. The drug is Tirzepatide – but is being marketed as Mounjaro. It will be transformative for type 2 diabetes patients, and now, Eli Lilly is working to get the drug approved for obesity treatment. Considering the current US obesity rate stands at 42.4%, this secondary use-case would be a tremendous breakthrough for the company. And this is what has analysts so excited.
While the projections for what Mounjaro could bring in are already tremendous, they continue to grow higher as we learn more about the drug. It was originally estimated that peak annual sales for Mounjaro could exceed $20 billion. Now, it’s been reworked to $25 billion.
And pending the approval of obesity treatment, the figures will be astronomical. And frankly, it’s not a matter of “if” Eli Lilly can get the FDA on board with an approval – it’s a matter of “when”. The FDA is already comfortable with the drug, as it boasts incredible results in testing so far with very mild side effects. What’s really exciting for those who are already invested in LLY is that this is just one of the many drugs under the company’s umbrella. The experimental Alzheimer’s drug they’ve developed, for example, is another heavy hitter. And there are countless others to be excited about.
Now – it’s true that Eli Lilly has had a great year from a stock standpoint. However, it wasn’t until the release of this news that analysts saw the value in this stock. Since then, they’ve rated it a “buy”. But, what does the VectorVest system show for LLY?
Our stock analysis tool utilizes an intuitive, tried-and-true form of fundamental analysis to rate stocks. The method is simple and easy for investors to use – and allows them to gain a clear buy, sell, or hold recommendation at any given time, for any given stock. Let’s take a look at the current state of LLY through the lens of VectorVest.
3 Key Takeaways from LLY Stock Analysis You Need to Know Before Investing
The VectorVest system provides three proprietary ratings that tell investors everything they need to know about a stock to make informed, emotionless decisions. These are Relative Value (RV), Relative Safety (RS), and Relative Timing (RT). These sit on a scale of 0.00-2.00, and together, make up the overall VST rating for a stock. This is what dictates whether VectorVest rates the stock a buy, sell, or hold. Here’s the current landscape for LLY:
- Long-Term Upside Potential: Despite the news of Mounjaro, VectorVest’s long-term price appreciation potential rating for LLY, Relative Value, is 0.81. This is poor on a scale from 0.00 to 2.00. Moreover, VectorVest deems the stock to be severely overvalued – with a current value of $120 compared to a current price of $311.
- Very Good Safety: While the upside potential is lacking, LLY does have very good safety with an RS of 1.28. This suggests low risk, as RS is calculated from a deep analysis of a company’s financial consistency and predictability, business longevity, PE ratio, and more.
- Fair Timing: An indicator of price trend, the RT rating for LLY sits at just 0.96 – which is slightly below average. It appears the news of Mounjaro – and the analyst upgrade – isn’t moving the stock price as much as you may have assumed. This rating takes into account the direction, dynamics, and magnitude of a stock’s price trend. As this figure gravitates across 1.00 and towards 2.00, it will show a positive price trend with momentum behind it.
All things considered, LLY has an overall VST rating of 1.04 – which is fair. But is it enough to earn the stock a buy? Or, should you wait for a stronger trend to form before entering your position? Get a clear recommendation on your next move with LLY by getting a free stock analysis here.
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for LLY, it has poor upside potential – but very good safety and no real price trend at this time.
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