By almost any measure, Eli Lilly (LLY -2.02%) stock has been a standout so far in 2024. Using a basic yardstick, the pharmaceutical sector giant's share price has climbed by over 33%, against the S&P 500 index's 5%. A mix of well-established commercialized drugs, a robust pipeline, and the company's recent dive into the hottest segment of the pharmaceutical market have made its stock one of the most attractive in the sector.
What also helped was the company's just-released first-quarter results, which boasted an earnings beat and fresh guidance that came in ahead of analyst estimates. Shortly after the figures were published, several analysts raised their price targets on the stock. Let's take a look at one of those hikes.
15% upside potential
Just after Eli Lilly posted those numbers, Robyn Karnauskas of Truist Securities revised her fair value estimation of its shares. She now believes they're worth $892 apiece, up from her previous $850. The new target implies 15% upside from the stock's latest closing price as I write this. Karnauskas maintained her buy recommendation on the stock.
In a new research note, Karnauskas waxed bullish on those quarterly figures. She wrote "Solid first quarter 2024 revenues driven by Mounjaro/Zepbound strong performance and underlying demand seems healthy, and we see progress made to address manufacturing constraints, which remain top of mind given demand is expected to exceed supply throughout 2024."
Mounjaro and Zepbound are essentially the same drug, with the former being Food and Drug Administration (FDA)-approved for diabetes, and the latter for weight loss. Zepbound particularly has high potential, as such drugs are relatively new on the scene and precious few have earned regulatory nods.
Paying a premium for quality
Eli Lilly was a powerhouse in the pharmaceutical industry well before Zepbound became a hot item. The veteran company has proven to be very adept at both developing and commercializing drugs that address large patient populations.
The stock is relatively expensive on its current valuations, but it's got some of the juiciest potential in big pharma. I'd agree with Karnauskas that it's a buy at the current price.
