The GLP-1 (weight-loss drug) boom is continuing to gain steam. As the two leaders in the space, Eli Lilly (LLY) and Novo Nordisk (NVO) stand out as top picks for investors to play the trend. Though the two biotech innovators have felt the pressure from the July-August market sell-off, high demand and efforts to ramp up production seem to be setting the stage for a glorious growth surge at some point over the near future. As always, though, one firm may be in better shape than the other to seize the colossal market opportunity at hand.
Reportedly, as much as 9% of the U.S. population could be “on” some form of GLP-1 drug by 2030, at least according to a research report conducted by JPMorgan (JPM) .
At the end of the day, I view both Eli Lilly and Novo Nordisk as leaders in the GLP-1 race. And while both can profit profoundly over the coming years, there are important nuances between the names to consider. In this piece, we’ll check in with TipRanks’ Comparison Tool to weigh in (no pun intended here) on the two top obesity drug players and how they stand going into year’s end.
Eli Lilly (LLY)
Eli Lilly, best known for its Mounjaro and Zepbound drugs, has been quick to rebound from the summer slump in GLP-1 drug makers. The stock is right back above $900 per share after briefly plunging 19% to $747 and change. A solid quarterly report is a large reason why the GLP-1 top dog experienced a surge. Indeed, dip-buyers deserve a pat on the back if they scooped up the name on the way down, even as fears gripped Wall Street.
With recent studies favoring Eli Lilly’s Mounjaro offering as performing better (those on Mounjaro lost more pounds) than Novo Nordisk’s Ozempic, I can’t be anything but bullish on the stock.
Up more than 20% since its latest earnings report, offsetting most of the losses endured last month, questions linger as to whether it’s too late to punch one’s ticket back into the name. I don’t think it is. With Mounjaro now known as the better performer, doctors may very well start prescribing Eli Lilly’s offering over Ozempic. Indeed, Ozempic’s market positioning is strong, especially with its incredibly catchy but oh-so-incredibly annoying television commercials (Oh, oh, oh, Ozempic). That said, performance and efficacy trump marketing, especially when one’s health is at stake.
Though Mounjaro may come out on top today, it’s important to remember that the GLP-1 scene is likely to be dynamic. Just like ChatGPT may not be the king of AI five years from now, Mounjaro may not be the top GLP-1 shot to get by the decade’s conclusion.
That said, Lilly has some of the best talent on Earth. And with a full obesity pipeline of promise, I’d pin Lilly’s odds of long-term GLP-1 domination as pretty high. Given the growth to be had and Lilly’s unmatched biotech prowess, I’d not bet against the name, especially while Wall Street continues pounding the table on the stock. Highlighting LLY’s strength, in the latest quarter, Zepbound (a monoclonal antibody treating plaque psoriasis inflammation) sales soared to $1.2 billion, topping estimates by $300 million.
As more people go on Eli Lilly’s drugs and as Mounjaro nibbles at Ozempic’s heels, the red-hot quarter may just be the start.
What Is the Price Target on LLY Stock?
LLY stock is a Strong Buy, according to analysts, with 15 Buys and three Holds assigned in the past three months. The average LLY stock price target of $1,000.69 implies 7.4% upside potential.
See more LLY analyst ratings
Novo Nordisk (NVO)
Shares of Ozempic and Wegovy maker Novo Nordisk may not be the hottest GLP-1 play anymore — not while Wegovy sales came in a tad short of expectations in the latest quarter (11.7 billion kr. (Danish krone) vs. 13.5 billion kr. expectation). Still, the company still has major skin in the game and the opportunity to one-up Eli Lilly at some point down the road. Like Lilly, Novo has some incredible talent and a stacked pipeline that may yield a next-generation weight-loss drug that helps people lose weight and keep it off.
Further, there are bonus points to be had for the minimization of muscle loss. With a cheaper valuation and major growth still ahead, I have to be bullish on NVO stock.
Despite the recent relief rally, NVO stock is stuck in a hangover, still off around 9% from its all-time high. Undoubtedly, the latest quarterly fumble is a major reason why the stock’s in a bit of a rut. However, don’t let one quarter deter you from a high-growth stock that’s trading at an increasingly more palatable multiple. At writing, NVO stock goes for an absurdly low 39.5 times forward price-to-earnings (P/E), miles below LLY stock’s 56.2 times forward P/E.
Sure, recent news (the Mounjaro vs. Ozempic study and better earnings report) has been going Lilly’s way of late. That said, Novo is still sitting on the GLP-1 throne. Additionally, its oral version of semaglutide is in the works, and combination therapies like CagriSema (a blend of semaglutide and cagrilintide for obesity) could keep it on the throne for years to come.
What Is the Price Target for NVO Stock?
NVO stock is a Moderate Buy, according to analysts, with six Buys, one Hold, and one Sell assigned in the past three months. The average NVO stock price target of $145.25 implies 8.1% upside potential.
See more NVO analyst ratings
Conclusion
I don’t think you can go wrong with either GLP-1 stock right now. However, if I had to go with one, it’d be Novo Nordisk. Why? It’s the far cheaper stock, and recent negative headlines seem to be distracting investors from the long-term opportunity at hand. The GLP-1 “race” could span many years and see a number of drugs compete for the tens of millions of potential customers.
Disclosure