2024 has been a breakout year for Eli Lilly and Company (LLY - Get Rating), with its shares surging nearly 56% year-to-date. This growth is largely driven by the company’s blockbuster drugs in the diabetes and obesity markets, particularly Mounjaro and Zepbound. In addition, the recent FDA approval of its eczema drug, EBGLYSS, in September has garnered significant attention.

But with these wins under its belt, does Eli Lilly remain a top healthcare stock? Let’s find out.

Lilly’s latest win

On September 25, LLY received FDA approval for its new eczema treatment, Ebglyss. Unlike traditional topical treatments like creams or ointments, Ebglyss is an injectable designed for patients (aged 12 and older) with moderate-to-severe eczema who don’t find relief with topical medications. This medication is a monthly injection that can be used on its own or alongside topical corticosteroids.

According to the company, about 16.5 million adults in the U.S. suffer from eczema, with roughly 40% experiencing severe symptoms such as cracked and bleeding skin, itchiness, and rashes. It reported that more than 80% of patients who received Ebglyss for three years were able to manage their eczema effectively.

Weight-Loss Market Expansion

Beyond dermatology, LLY continues to expand its footprint in the weight-loss market. On August 20, LLY announced that its weight-loss drug, tirzepatide, reduced the risk of developing type 2 diabetes by 94% among patients with prediabetes and obesity while also helping them lose an average of nearly 23% of their body weight.

Further, to make this weight-loss drug more accessible, LLY introduced a lower-cost version of tirzepatide under the brand name Zepbound, offering single-dose vials priced at least 50% below similar treatments on the market. This strategy could further expand its market reach and drive additional revenue growth.

Strong Financials

LLY’s total revenue for the fiscal second quarter (ended June 30, 2024) increased 36% year-over-year to $11.30 billion, driven by the sales of its diabetes and weight-loss drugs Mounjaro and Zepbound. Revenue from Lily’s Verzenio also saw a substantial uptick, growing by 44% year-over-year to $1.33 billion.

Its non-GAAP gross margin also increased 40% from the year-ago value to $9.27 billion, while its operating income rose 74.7% from the prior-year quarter to $7.25 billion. Moreover, the company’s non-GAAP net income and earnings per share amounted to $3.54 billion and $3.92, representing an increase of 85.9% and 85.8%, respectively.

Buoyed by this strong performance, the company increased its full-year 2024 revenue guidance by $3 billion and non-GAAP EPS forecast by $2.60 to the range of $16.10 to $16.60. LLY also plans to bolster its production of diabetes and weight-loss drugs later this year.

Rosy Annual Forecasts

The consensus revenue estimate for the current year ending December 31, 2024, stands at $46.21 billion, signaling a 35.4% year-over-year increase. Moreover, the company’s EPS is anticipated to witness an impressive 111.6% uptick from the previous year, reaching $13.37.

Looking ahead, analysts anticipate a 25.7% increase in revenue for the fiscal year 2025, with projections reaching $58.08 billion. Similarly, EPS for the next year is expected to grow 71.8% from the prior year, settling at $22.98.

POWR Ratings Show Promise

LLY’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. LLY has a B grade for Growth, which is consistent with its strong financial performance in the last reported quarter.

LLY is ranked #42 out of 161 stocks in the Medical – Pharmaceuticals industry. Click here to access LLY’s Value, Momentum, Stability, Sentiment, and Quality ratings.

Bottom Line

Beyond its success in weight management, the company is expanding its reach into areas like Alzheimer’s, eczema, and even artificial intelligence. Moreover, the recent FDA approval of Ebglyss for eczema is yet another win, adding to LLY’s growing portfolio of blockbuster drugs. With the global eczema market expected to more than double by 2034, the company’s new treatment has the potential to significantly boost revenue and keep the stock on its upward path.

Over the past year, the stock has gained 55.5% to close the last trading session at $909.15. Given this momentum, strong financials, and an optimistic outlook, we believe that adding LLY to your portfolio could be beneficial.

How Does Eli Lilly and Company (LLY) Stack Up Against Its Peers?

While LLY has an overall grade of B, equating to a Buy rating, you may also check out these other A-rated (Strong Buy) stocks within the Medical – Pharmaceuticals industry: Novartis AG (NVS - Get Rating), GSK plc (GSK - Get Rating) and AbbVie Inc. (ABBV - Get Rating). To explore more medical pharmaceutical stocks, click here.

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LLY shares were trading at $896.45 per share on Wednesday afternoon, down $12.70 (-1.40%). Year-to-date, LLY has gained 54.53%, versus a 23.09% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...

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