Eli Lilly stock is Monday's IBD Stock Of The Day. Shares are forming a new flat base after the Food and Drug Administration approved Lilly's new weight-loss drug, Zepbound.
The weight-loss drug mimics two gut hormones called GLP-1 and GIP to improve feelings of satiety and markers of blood glucose, and slow how fast the stomach empties itself. It's based on the same drug, tirzepatide, behind diabetes treatment Mounjaro.
Lilly is now directly rivaling Novo Nordisk, which sells its drug semaglutide in diabetes treatment as Ozempic and Rybelsus, and as a weight-loss drug called Wegovy. But, at $1,056 a month, Zepbound is being offered at a 20% discount to Wegovy, Leerink Partners analyst David Risinger said in a note. This could drive better insurance coverage and patient uptake.
Now, Eli Lilly stock is forming a flat base with a buy point at 629.97, according to MarketSmith.com. Friday's high point offers an early entry as shares remain above their 50-day moving average.
Eli Lilly stock rose 1% to close at 597.60 on the stock market today.
Eli Lilly Stock: Rivaling Novo Nordisk
In the third quarter, before Zepbound's approval, Mounjaro generated $1.41 billion in sales, easily beating expectations and flying 652% year over year.
But Eli Lilly and Novo Nordisk are facing supply constraints for their new diabetes and weight-loss drugs, according to RBC Capital Markets analysts.
New data from researcher Iqvia show prescriptions of Wegovy, Ozempic and Mounjaro "continue to fluctuate" and have "decreased from September — indicating that supply constraints continue to be an issue," they said in a report Monday.
Both companies are working to ramp supply with Novo and Lilly, recently announcing plans to invest a respective $6 billion in $2.5 billion in expanding production, the report said.
Despite supply concerns, Eli Lilly stock analysts still expect Mounjaro sales to skyrocket 841% this year to $4.55 billion. They call for Zepbound to generate $75 million in sales this year, reflecting its late launch. But next year, analysts project $3.79 billion in sales. That's a nearly 5,000% increase.
Meanwhile, Wegovy — which has been on the market since 2021 — is expected to put up $4.4 billion in sales this year and $7.97 billion next year, according to FactSet. Zepbound isn't expected to catch up to Wegovy in terms of sales in the near term.
Looking Beyond Weight-Loss Drugs
But Eli Lilly is also working on several late-stage assets.
Lilly expects the Food and Drug Administration to make an approval decision on Lilly's Alzheimer's treatment, donanemab, in the first quarter. Eli Lilly stock analysts are also watching an eczema drug under regulatory review.
Lilly also has a number of drugs in final-phase testing. They include new approaches to prostate and breast cancer, Crohn's disease, diabetes and weight loss. Investors are eyeing another experimental obesity treatment, retatrutide, which targets three gut hormones.
Bullishly, Eli Lilly stock has a strong IBD Relative Strength Rating of 96, putting its 12-month performance in the leading 4% of all stocks. Shares also have a top 10% Composite Rating, a measure of a stock's fundamental and technical performance.
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