We knew that pharmaceutical firm Eli Lilly (LLY) had an edge in the market with its weight loss drug tirzepatide, the active ingredient in both Zepbound and Mounjaro. But a new tirzepatide benefit was recently found, and that gave Lilly shares a boost in Tuesday afternoon’s trading session, up over 2%.
So, what is that new benefit? In addition to treating diabetes, Tirzepatide can prevent it. Those who used it saw the risk of developing Type 2 diabetes drop by 94% when used by obese and overweight adults with prediabetes conditions. The biggest connection herein appears to be a loss of body weight, as adults on the highest weekly dose of the drug lost an average of 22.9% of their body weight after 176 weeks. A placebo, meanwhile, could only produce a 2.1% loss.
With one in three Americans currently having prediabetes—a level of blood sugar that is high but not sufficiently high to be considered full diabetes—it suggests a potential major new market, and likely one that will be covered by insurance. This could be excellent news for Eli Lilly, even as other weight loss drugs look to hit the market.
Going after Potentially Profitable Deals Elsewhere
Meanwhile, Lilly is taking advantage of the money it is raking in with Mounjaro and Zepbound by using its investment arm—Catalyze360—to go after potentially profitable deals elsewhere. And give it credit; it is not sticking to its comfort zone. As the group vice president for business development at Catalyze360, Dr. Nisha Nanda, said, “I think all areas are on the table for us.”
Catalyze360 does not limit itself to throwing cash at good ideas, however. It also offers co-working spaces, which are specifically structured to act like small business accelerators. This gives Lilly the ability to work as a venture capitalist and ultimately claim a share of tomorrow’s advances.
Is Eli Lilly a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on LLY stock based on 17 Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 73.45% rally in its share price over the past year, the average LLY price target of $1,036 per share implies 9.42% upside potential.
