ETFs to Buy as Eli Lilly Beats Q1 Earnings, Lifts Outlook
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 01 2024
0mins
Source: NASDAQ.COM
- Eli Lilly and Company Earnings: Eli Lilly posted mixed first-quarter 2024 earnings, beating earnings estimates but lagging on revenues. The stock jumped 6% in response to the earnings beat.
- Revenue and Sales Growth: Revenues rose 26% to $8.77 billion, driven by strong sales of drugs like Mounjaro, Zepbound, Verzenio, and Jardiance. Mounjaro's sales saw a significant increase.
- 2024 Outlook: Eli Lilly raised its revenue guidance for 2024 due to tremendous sales growth for Mounjaro and Zepbound. Adjusted earnings per share were also increased.
- ETFs Exposure to Eli Lilly: Investors can consider ETFs with exposure to Eli Lilly, such as iShares U.S. Pharmaceuticals ETF, Horizon Kinetics Medical ETF, iShares U.S. Healthcare ETF, Health Care Select Sector SPDR Fund, and VanEck Vectors Pharmaceutical ETF.
- Details of Specific ETFs: Each ETF offers different exposure to Eli Lilly, with varying assets under management, fees, and risk outlooks.
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Analyst Views on LLY
Wall Street analysts forecast LLY stock price to rise
20 Analyst Rating
18 Buy
2 Hold
0 Sell
Strong Buy
Current: 1191.740
Low
950.00
Averages
1192
High
1500
Current: 1191.740
Low
950.00
Averages
1192
High
1500
About LLY
Eli Lilly and Company is a medicine company, which discovers, develops, manufactures, and market products in a single business segment called human pharmaceutical products. The Company manufacture and distribute its products through facilities in the United States, including Puerto Rico, and in Europe and Asia. The Company’s products are sold in approximately 90 countries. Its Cardiometabolic Health products Basaglar; Humalog, Humalog Mix 75/25, Humalog U-100, Humalog U-200, Humalog Mix 50/50, insulin lispro, and others; Humulin, Humulin 70/30, and others; Jardiance; Mounjaro; Trulicity; Zepbound, and others. Its oncology products include Cyramza, Erbitux, Tyvyt, Verzenio, Retevmo, Jaypirca, and others. Its immunology products include Ebglyss, Olumiant, Omvoh, and Taltz. Its neuroscience products include Emgality and Kisunla. Its LillyDirect, a direct-to-patient digital health care platform, provides delivery of select Lilly medicines dispensed by third-party pharmacies to patients.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Eli Lilly Stock Valuation Analysis
- Stock Performance: Eli Lilly's stock has surged approximately 441.5% over the past five years, currently priced around $1,213, indicating strong performance; however, multiple valuation checks suggest the stock may be overpriced, prompting investors to carefully assess entry points.
- Cash Flow Forecast: Over the last twelve months, Eli Lilly generated about $8.6 billion in free cash flow, with the DCF model estimating an intrinsic value of approximately $1,591 per share, implying the current stock price is roughly 23.7% undervalued, providing potential upside for investors.
- P/E Ratio Analysis: Eli Lilly's P/E ratio stands at about 42.8x, significantly above the pharmaceutical industry average of 15.4x, although its tailored fair P/E ratio is approximately 39.2x, indicating that while investors are paying a premium for growth expectations, it is not excessively out of line with the company's profile.
- Market Expectations and Risks: While Eli Lilly's GLP-1 drugs bolster cash flow expectations, regulatory and pricing pressures may limit the premium investors are willing to pay, making the ability to sustain current cash flows and pipeline execution critical for future valuation.
See More
Viking Therapeutics Faces Intense Competition in Obesity Drug Market
- Market Potential: According to Goldman Sachs, the weight loss drug market could reach $95 billion by 2030, while J.P. Morgan estimates the GLP-1 drug market at nearly $200 billion, highlighting significant opportunities for Viking Therapeutics in this sector.
- Investment Return Analysis: If VK2735 gains approval and captures 1% of the market, Viking's valuation could rise from $4.4 billion to $15 billion, allowing a $1,000 investment to grow to approximately $3,400, although risks of share dilution remain.
- Intense Competitive Pressure: VK2735 must secure approval by 2028 or 2029, by which time Eli Lilly and Novo Nordisk will have established strong market positions with effective treatments, presenting a high barrier for VK2735 to overcome.
- Clinical Trial Risks: VK2735's injectable form demonstrated a 14.7% weight loss in mid-stage trials, but its phase 3 trials won't conclude until 2027, and oral formulation trials are just beginning, creating uncertainty that could lead to investor losses of 60% to 80%.
See More
Viking Therapeutics Faces Market Challenges Ahead of VK2735 Launch
- Intense Market Competition: Viking Therapeutics' VK2735 is expected to hit the market within two years, yet it faces fierce competition from giants like Eli Lilly and Novo Nordisk, which dominate the obesity drug market, potentially hindering Viking's ability to capture market share.
- Clinical Trial Data: VK2735 demonstrated a weight loss of 14.7% in mid-stage trials, but even with promising data, Viking must exhibit significant advantages in efficacy, pricing, and tolerability to secure even 1% of the market.
- Investment Return Forecast: If VK2735 gains approval and captures 1% of the market, projected annual sales could reach $1.5 billion, leading to a potential company valuation of $15 billion based on a 10x price-to-sales ratio, suggesting a $1,000 investment could grow to $3,400, but dilution from new fundraising could reduce it to $2,500.
- Risk Assessment: In the best-case scenario, a $1,000 investment could grow to $10,000 by 2030, but given market competition and clinical trial uncertainties, the most likely outcome is closer to $2,500, highlighting the high-risk nature of investing in Viking.
See More
Market Outlook for Viking Therapeutics by 2030
- Significant Market Potential: According to Goldman Sachs, the weight loss drug market could reach $95 billion by 2030, while J.P. Morgan estimates the broader GLP-1 market at nearly $200 billion, with Viking's VK2735 potentially capturing 1% of the market, translating to $1.5 billion in annual sales.
- Investment Return Expectations: If VK2735 successfully launches and achieves a price-to-sales ratio of 10, Viking's market cap could rise from $4.4 billion to $15 billion, suggesting that a $1,000 investment could grow to approximately $3,400, although risks of share dilution remain.
- Intense Competitive Landscape: VK2735 faces fierce competition from Eli Lilly and Novo Nordisk, whose drugs have demonstrated significant weight loss in clinical trials, necessitating VK2735 to offer clear advantages in efficacy, pricing, and tolerability to gain market share.
- Slow Clinical Trial Progress: The phase 3 trial for VK2735's injectable form is not expected to complete until 2027, while oral trials are just beginning; failure to replicate favorable data in larger cohorts could lead to a significant drop in investor confidence, potentially reducing a $1,000 investment to a few hundred dollars.
See More
Viking Therapeutics' Prospects in the Weight Loss Drug Market
- Market Potential: The weight loss drug market is projected to reach nearly $100 billion in the coming years, presenting Viking Therapeutics with significant growth opportunities as a newcomer in a space dominated by Eli Lilly and Novo Nordisk.
- Clinical Trial Progress: Viking's lead candidate VK2735 is currently in phase 3 trials, with an oral version set to begin in Q4; positive data could significantly boost stock prices and attract investor interest.
- Pipeline Diversification: In addition to VK2735, Viking has launched a phase 1 trial for VK3019, representing a new strategy for obesity treatment, showcasing the company's diversity in drug development and potential for attracting partnerships.
- Risks and Challenges: Despite a 40% stock price increase over the past year, Viking faces stiff competition from giants like Eli Lilly and Novo Nordisk, and any failure of drug candidates could severely impact its market position, necessitating careful risk assessment by investors.
See More
Johnson & Johnson's CEO Focuses on Cancer Drugs Over Weight Loss Market
- Strategic Shift: CEO Joaquin Duato of Johnson & Johnson has stated that the company will not engage in the GLP-1 weight loss drug race, instead focusing on oncology and its large medical device business, a strategic shift aimed at reducing reliance on a single market and enhancing long-term stability.
- Investment in Cancer Drugs: Johnson & Johnson holds a strong market position in bone and lung cancer and has recently acquired a company with an attractive prostate cancer drug candidate, which not only enriches its product line but also provides diversified growth opportunities for the company.
- Medical Device Advantage: As one of the world's largest pharmaceutical companies, Johnson & Johnson is also a giant in the medical device sector, focusing on surgical items and new joints, which allows for a diversified investment portfolio that mitigates market risks compared to pure-play drug manufacturers.
- Financial Comparison: Johnson & Johnson's P/E ratio stands at 29x, significantly lower than Eli Lilly's 40x, while offering a 2.1% dividend yield compared to Eli Lilly's 0.6%, indicating that Johnson & Johnson may present better long-term value, especially for income-focused investors.
See More
Eli Lilly Stock Valuation Analysis
- Stock Performance: Eli Lilly's stock has surged approximately 441.5% over the past five years, currently priced around $1,213, indicating strong performance; however, multiple valuation checks suggest the stock may be overpriced, prompting investors to carefully assess entry points.
- Cash Flow Forecast: Over the last twelve months, Eli Lilly generated about $8.6 billion in free cash flow, with the DCF model estimating an intrinsic value of approximately $1,591 per share, implying the current stock price is roughly 23.7% undervalued, providing potential upside for investors.
- P/E Ratio Analysis: Eli Lilly's P/E ratio stands at about 42.8x, significantly above the pharmaceutical industry average of 15.4x, although its tailored fair P/E ratio is approximately 39.2x, indicating that while investors are paying a premium for growth expectations, it is not excessively out of line with the company's profile.
- Market Expectations and Risks: While Eli Lilly's GLP-1 drugs bolster cash flow expectations, regulatory and pricing pressures may limit the premium investors are willing to pay, making the ability to sustain current cash flows and pipeline execution critical for future valuation.
See More
Viking Therapeutics Faces Intense Competition in Obesity Drug Market
- Market Potential: According to Goldman Sachs, the weight loss drug market could reach $95 billion by 2030, while J.P. Morgan estimates the GLP-1 drug market at nearly $200 billion, highlighting significant opportunities for Viking Therapeutics in this sector.
- Investment Return Analysis: If VK2735 gains approval and captures 1% of the market, Viking's valuation could rise from $4.4 billion to $15 billion, allowing a $1,000 investment to grow to approximately $3,400, although risks of share dilution remain.
- Intense Competitive Pressure: VK2735 must secure approval by 2028 or 2029, by which time Eli Lilly and Novo Nordisk will have established strong market positions with effective treatments, presenting a high barrier for VK2735 to overcome.
- Clinical Trial Risks: VK2735's injectable form demonstrated a 14.7% weight loss in mid-stage trials, but its phase 3 trials won't conclude until 2027, and oral formulation trials are just beginning, creating uncertainty that could lead to investor losses of 60% to 80%.
See More
Viking Therapeutics Faces Market Challenges Ahead of VK2735 Launch
- Intense Market Competition: Viking Therapeutics' VK2735 is expected to hit the market within two years, yet it faces fierce competition from giants like Eli Lilly and Novo Nordisk, which dominate the obesity drug market, potentially hindering Viking's ability to capture market share.
- Clinical Trial Data: VK2735 demonstrated a weight loss of 14.7% in mid-stage trials, but even with promising data, Viking must exhibit significant advantages in efficacy, pricing, and tolerability to secure even 1% of the market.
- Investment Return Forecast: If VK2735 gains approval and captures 1% of the market, projected annual sales could reach $1.5 billion, leading to a potential company valuation of $15 billion based on a 10x price-to-sales ratio, suggesting a $1,000 investment could grow to $3,400, but dilution from new fundraising could reduce it to $2,500.
- Risk Assessment: In the best-case scenario, a $1,000 investment could grow to $10,000 by 2030, but given market competition and clinical trial uncertainties, the most likely outcome is closer to $2,500, highlighting the high-risk nature of investing in Viking.
See More
Market Outlook for Viking Therapeutics by 2030
- Significant Market Potential: According to Goldman Sachs, the weight loss drug market could reach $95 billion by 2030, while J.P. Morgan estimates the broader GLP-1 market at nearly $200 billion, with Viking's VK2735 potentially capturing 1% of the market, translating to $1.5 billion in annual sales.
- Investment Return Expectations: If VK2735 successfully launches and achieves a price-to-sales ratio of 10, Viking's market cap could rise from $4.4 billion to $15 billion, suggesting that a $1,000 investment could grow to approximately $3,400, although risks of share dilution remain.
- Intense Competitive Landscape: VK2735 faces fierce competition from Eli Lilly and Novo Nordisk, whose drugs have demonstrated significant weight loss in clinical trials, necessitating VK2735 to offer clear advantages in efficacy, pricing, and tolerability to gain market share.
- Slow Clinical Trial Progress: The phase 3 trial for VK2735's injectable form is not expected to complete until 2027, while oral trials are just beginning; failure to replicate favorable data in larger cohorts could lead to a significant drop in investor confidence, potentially reducing a $1,000 investment to a few hundred dollars.
See More
Viking Therapeutics' Prospects in the Weight Loss Drug Market
- Market Potential: The weight loss drug market is projected to reach nearly $100 billion in the coming years, presenting Viking Therapeutics with significant growth opportunities as a newcomer in a space dominated by Eli Lilly and Novo Nordisk.
- Clinical Trial Progress: Viking's lead candidate VK2735 is currently in phase 3 trials, with an oral version set to begin in Q4; positive data could significantly boost stock prices and attract investor interest.
- Pipeline Diversification: In addition to VK2735, Viking has launched a phase 1 trial for VK3019, representing a new strategy for obesity treatment, showcasing the company's diversity in drug development and potential for attracting partnerships.
- Risks and Challenges: Despite a 40% stock price increase over the past year, Viking faces stiff competition from giants like Eli Lilly and Novo Nordisk, and any failure of drug candidates could severely impact its market position, necessitating careful risk assessment by investors.
See More
Johnson & Johnson's CEO Focuses on Cancer Drugs Over Weight Loss Market
- Strategic Shift: CEO Joaquin Duato of Johnson & Johnson has stated that the company will not engage in the GLP-1 weight loss drug race, instead focusing on oncology and its large medical device business, a strategic shift aimed at reducing reliance on a single market and enhancing long-term stability.
- Investment in Cancer Drugs: Johnson & Johnson holds a strong market position in bone and lung cancer and has recently acquired a company with an attractive prostate cancer drug candidate, which not only enriches its product line but also provides diversified growth opportunities for the company.
- Medical Device Advantage: As one of the world's largest pharmaceutical companies, Johnson & Johnson is also a giant in the medical device sector, focusing on surgical items and new joints, which allows for a diversified investment portfolio that mitigates market risks compared to pure-play drug manufacturers.
- Financial Comparison: Johnson & Johnson's P/E ratio stands at 29x, significantly lower than Eli Lilly's 40x, while offering a 2.1% dividend yield compared to Eli Lilly's 0.6%, indicating that Johnson & Johnson may present better long-term value, especially for income-focused investors.
See More
