Eli Lilly (LLY 1.93%) stock has had quite a run lately, rising by more than 18% since April 30, comparing favorably with the bellwether S&P 500 index’s 5% increase.
I’m not picking that date at random. That was when Lilly published its first-quarter results and held a conference call to discuss them. I feel that one remark from company CEO David Ricks during the call was particularly encouraging — both to analysts tracking the stock and the investors who bid it up in price.
A new and hot product
Ricks was talking about Lilly’s hottest new product, Foundayo. This is the company’s first U.S. Food and Drug Administration (FDA)-approved weight loss pill. Although its indication matches that of Zepbound, Lilly’s initial FDA-approved obesity drug, it’s based on a different molecule (Orforglipron versus Tirzepatide).
Image source: Getty Images.
It’s more appealing as a convenience drug — Zepbound is an injectable — as studies have shown more modest weight loss than that demonstrated by Zepbound.
During the conference call, Ricks said of Foundayo that, even though it’s at the start of its commercial life, the company is “encouraged by momentum against our 2026 launch priorities.”
We can take this to mean that the medicine’s take-up is notably higher than management expected. We don’t know Lilly’s internal estimates for the drug’s crucial metrics (prescriptions and sales in particular), but they were sure to be optimistic.
After all, Zepbound has been a star in the pharmacy almost since its initial FDA approval in November 2023. In the first quarter of this year, sales of Zepbound jumped 80% year over year to nearly $4.2 billion. The far easier-to-administer Foundayo is a safe bet to enjoy similar popularity.
Today’s Change
(-1.93%) $-21.38
Current Price
$1083.62
Key Data Points
Market Cap
$1.0T
Day’s Range
$1072.06 – $1105.21
52wk Range
$623.78 – $1149.10
Volume
73.1K
Avg Vol
3.1M
Gross Margin
82.83%
Dividend Yield
0.58%
Reputation enhancer
Foundayo’s success will surely be a headline-grabber for Lilly, burnishing the pharmaceutical giant’s reputation. After disseminating the quarterly figures and statements during the conference call, several analysts were quick to raise their price targets on the company’s stock; among them were analysts at Morgan Stanley and Barclays.
They’re not only cheered by Ricks’ utterances. Lilly is a sprawling, veteran company in its field, and both its commercial portfolio and pipeline span many therapeutic areas. In fact, rather than resting on its laurels with the weight loss drugs, it’s relentlessly expanding its range. At the end of May, it announced the acquisition of no fewer than three privately held vaccine developers.
Lilly is doing a great many things right these days, and both its commercial portfolio and its investigational programs look impressive. This is a giant set to grow even larger, and I’d say the same with its stock price. It’s one of the better buys in the healthcare sector now.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.
