Eli Lilly Poised to Become First Pharmaceutical Company to Reach $1 Trillion Market Cap

Feb 15, 2024 16:03 CST Updated 16:03

Eli Lilly

Global Pharmaceutical R&D and Production Company

On February 13, Eli Lilly's market value surpassed $700 billion for the first time at the close of trading, ranking it among the top ten in the U.S. stock market.

February 14th ClosingWith a market value of $714.3 billion (approximately 5.17 trillion yuan)Comparable to the total market value of all A-share and H-share pharmaceutical and healthcare companies in China.

PreviouslyBillionaire and renowned investor Ken Langone said in an interview with CNBC that he believes Eli Lilly and Company will become the first pharmaceutical company in history to reach a market value of one trillion dollars.。

In 2023, Eli Lilly and Company rode the GLP-1 drug wave with Mounjaro and Zepbound, seeing its stock price soar 62% in a year.

Ken Langone, a long-term shareholder of Eli Lilly, said that as early as 2015, Eli Lilly was his top choice: "Going back 46 years when I first held it, including dividends, [the stock] has had an annual compound growth rate of 14.8%."

Eli Lilly's 2023 financial report shows that fourth-quarter revenue significantly exceeded expectations. Eli Lilly noted in the report that the substantial revenue increase was driven by a 28% year-over-year rise in new product sales, primarily propelled by the "weight-loss wonder drug" Zepbound and the blockbuster diabetes medication Mounjaro.

Some analysts believe that, driven by strong demand for Eli Lilly's "weight-loss miracle drug," research breakthroughs in fatty liver disease MASH, the potential lifting of supply constraints, robust capital barriers, and high market expectations, Eli Lilly has ample reason to replace Tesla as one of the "Magnificent Seven" in the U.S. stock market.

At the same time, analysts expect that among Eli Lilly's numerous drugs, just Zepbound and Mounjaro alone could bring the company over $40 billion in annual revenue later this decade. The weight-loss drug market is currently in a rapid growth phase, similar to the early stages of electric vehicle development.

In terms of market valuation, Eli Lilly and Tesla have had similar experiences. Both have been favored by investors due to their dominance in their respective markets and significant growth potential, leading to valuations far exceeding those of other companies within the same industries. This phenomenon is partly attributed to "pop culture hype," where widespread social attention and optimism about the future growth prospects of these companies have driven up their stock prices.

FactSet data shows that Tesla's expected price-to-earnings ratio for the next 12 months is 57 times, while Eli Lilly and Company's price-to-earnings ratio is 55 times. In contrast, traditional automaker Ford's price-to-earnings ratio is 6.6 times, and Johnson & Johnson's price-to-earnings ratio is 15 times. Even high-growth tech leader Amazon has a price-to-earnings ratio of only 41 times.

Source: finance.yahoo.com, Wall Street News

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