Eli Lilly (NYSE: LLY) seems to be capitalizing on opportunities in the diabetes/obesity segment, drawing significant interest from investors and analysts alike. With investors showing strong confidence in LLY shares over the past year, there’s speculation that it could become the first pharmaceutical company to reach a $1 trillion market cap. Analyst Chris Schott from J.P. Morgan also expressed optimism about the company’s prospects after recent meetings with management.
Schott believes that LLY is well-positioned in the diabetes/obesity market, particularly with its obesity injection Zepbound, which received FDA approval in November and has seen strong initial demand, especially from cash pay patients. Additionally, LLY anticipates that demand for incretins will continue to exceed supply, leading to more stable pricing in the obesity space.
Looking ahead, Schott sees further upside potential for LLY, especially as its type 2 diabetes treatment Mounjaro gains traction, Zepbound continues its market presence, and the company advances its incretin pipeline. He also highlights the potential of orforglipron, a weight loss pill under development, which could be a “game changer” for LLY, enabling expansion into key markets like India, China, and Brazil.
Moreover, the orally administered orforglipron could address the demand for more affordable treatment options in developed markets, catering to patients who prefer oral treatments. LLY maintains confidence in the drug’s safety profile, particularly its liver safety.
Schott suggests that if phase 3 data in 2025 confirms the drug’s safety profile, there could be further upside to Street estimates for orforglipron. He believes that an oral GLP-1 could help alleviate capacity constraints currently facing the class and sustain LLY’s leadership position in the diabetes/obesity space.
As a result, Schott maintains an Overweight (Buy) rating for LLY shares and increases his price target from $775 to $850, implying a 13% potential upside by the end of the year. Overall, among Schott’s colleagues, there is a Strong Buy consensus rating for LLY shares, with an average price target of $830.67, suggesting a 12-month return of 7.5%.