ELI Lilly & Co’s relentless stock records have Morgan Stanley analysts musing whether it will become the first US company outside of the Magnificent Seven to reach a market value of US$1 trillion.
The analysts lifted their price target on the weight-loss drugmaker to the highest on Wall Street on Friday (Feb 16), to a level that would take the market capitalisation to about US$900 billion, according to Bloomberg calculations.
“Could Lilly be the first US$1 trillion biopharma stock?” Morgan Stanley’s Terence Flynn and colleagues asked in a note to clients. “We continue to see a path for further upside.”
Shares of the drugmaker climbed 3.2 per cent on Friday to hit a fresh record high. The stock has jumped 34 per cent this year, bolstered by demand for its Mounjaro and Zepbound drugs for diabetes and obesity. That has taken Lilly’s market capitalisation to more than US$740 billion, placing it among the 10 most valuable companies in the S&P 500 Index.
Lilly’s market value overtook that of Tesla last month following disappointing earnings and growth concerns for the electric-car maker, which reached the US$1 trillion mark in 2021 but has since fallen out of that select group. The US$1 trillion-plus club now consists of Microsoft, Apple, Nvidia, Alphabet, Amazon.com and Meta Platforms. The only non-tech company with a higher market cap than Lilly is Berkshire Hathaway.
Several analysts boosted their price targets on Lilly this month following upbeat earnings results, including those at Societe Generale, Jefferies and Barclays, according to data compiled by Bloomberg. Some, however, appear to be betting that the optimism has already been priced in: Lilly shares closed at US$782.06 on Friday, compared to the average analyst price target of US$756.
The company’s blockbuster diabetes drug Mounjaro is commonly used off-label for weight loss, while Zepbound, which was recently approved for weight loss, is predicted to become the best-selling drug in history. BLOOMBERG
