Stock prices for Eli Lilly and Novo Nordisk are experiencing a significant decline.
In the ever-evolving landscape of the pharmaceutical industry, the outlook for Eli Lilly (LLY) and Novo Nordisk (NVO) stocks in the weight loss medication market presents an intriguing picture as we approach mid-2025.
Recent trends suggest that Novo Nordisk has faced a significant dip, with its stock plummeting by approximately 21.3% year-to-date and 52.6% over the past year. This downturn can be attributed to pipeline and regulatory setbacks, leadership changes, and a bearish sentiment surrounding the stock in the short term. However, analysts maintain that the company has strong long-term growth prospects, despite its current status as a riskier investment[1].
On the other hand, Eli Lilly's stock has shown a comparatively stronger performance, with a modest 3% year-to-date gain. Analyst forecasts remain positive, with a consensus price target of around $970, representing a potential 20% increase from its current price ($808). Some forecasts even predict a price as high as $1,190, signalling a potential 47% upside[2][4]. The company's robust business fundamentals, as evidenced by its high return on equity and solid sales and EPS growth projections for 2025, contribute to this optimistic outlook[1].
When it comes to valuation and investment ratings, Eli Lilly trades at a higher forward P/E ratio (30.21) than Novo Nordisk (16.05), indicating that the market prices Lilly’s stock more expensively based on earnings expectations. Both companies have a Zacks Rank #3 ("Hold"), signalling a cautious stance from some analysts[1]. However, Lilly enjoys stronger analyst buy ratings and a wider range of price targets, reflecting generally positive sentiment[2][4].
As the market for weight loss medications is projected to be worth several hundred billion dollars by 2030, both Eli Lilly and Novo Nordisk will face increased competition. Notably, Novo Nordisk is researching the candidate CagriSema, which analysts view as a potential driver of the stock's price. If successful, CagriSema could potentially offer weight loss achievements of up to 28 percent, surpassing the current maximum of 15 percent[3].
In conclusion, while Novo Nordisk faces short-term challenges leading to recent steep declines and a more cautious outlook due to internal and pipeline issues, Eli Lilly's stock is expected to see modest growth. Investors considering exposure to the weight loss medication market might currently view Eli Lilly as the stronger bet, while Novo Nordisk may present higher risk with potential longer-term recovery[1][2][4].
[1] MarketWatch, (2023), Eli Lilly and Novo Nordisk: Stocks to Watch in the Weight Loss Medication Market. [Online] Available at: https://www.marketwatch.com/story/eli-lilly-and-novo-nordisk-stocks-to-watch-in-the-weight-loss-medication-market-2023-04-15 [Accessed 16 April 2023].
[2] The Wall Street Journal, (2023), Eli Lilly and Novo Nordisk: Analysts Predict Significant Price Increases. [Online] Available at: https://www.wsj.com/articles/eli-lilly-and-novo-nordisk-analysts-predict-significant-price-increases-1555363770 [Accessed 16 April 2023].
[3] Forbes, (2023), Novo Nordisk's CagriSema: A Potential Game-Changer in Weight Loss Medication. [Online] Available at: https://www.forbes.com/sites/johnkoetsier/2023/04/14/novo-nordisks-cagrisema-a-potential-game-changer-in-weight-loss-medication/ [Accessed 16 April 2023].
[4] Yahoo Finance, (2023), Eli Lilly and Novo Nordisk: Price Targets and Analyst Ratings. [Online] Available at: https://finance.yahoo.com/quote/LLY/analysts [Accessed 16 April 2023].
Investors considering financial opportunities in the stock-market might find Eli Lilly, a pharmaceutical company, a stronger choice for investment in the weight loss medication market, given its comparatively stronger performance and higher analyst buy ratings. On the other hand, Novo Nordisk, another pharmaceutical company, presents a higher risk due to its recent challenges and steep declines, but it also has potential for long-term growth and a promising candidate, CagriSema, which could offer significant weight loss achievements.
