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Portfolio > Portfolio Construction > Investment Strategies

Eli Lilly’s Climb Has Morgan Stanley Asking the $1T Question

By Lisa Pham and Joel Leon

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Eli Lilly & Co.’s relentless stock records have Morgan Stanley analysts musing whether it will become the first U.S. company outside of the Magnificent Seven to reach a market value of $1 trillion.

The analysts lifted their price target on the weight-loss drugmaker to the highest on Wall Street on Friday, to a level that would take the market capitalization to about $900 billion, according to Bloomberg calculations.

“Could Lilly be the first $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 as much as 2.1% on Friday, to hit a fresh record high.

The stock has jumped 32% this year, bolstered by demand for its Mounjaro and Zepbound drugs for diabetes and obesity. That’s taken Lilly’s market capitalization to nearly $730 billion, placing it among the 10 most valuable companies in the S&P 500 Index.

Lilly’s market value overtook that of Tesla Inc. last month following disappointing earnings and growth concerns for the electric-car maker, which reached the $1 trillion mark in 2021 but has since fallen out of that select group.

Eli Lilly Has Outpaced S&P 500, Peers Since Last Year

The $1 trillion-plus club now consists of Microsoft Corp., Apple Inc., Nvidia Corp., Alphabet Inc., Amazon.com Inc. and Meta Platforms Inc. The only non-tech company with a higher market cap than Lilly is Berkshire Hathaway Inc.

Several analysts boosted their price targets on Lilly this month following upbeat earnings results, including those at Societe Generale SA, Jefferies and Barclays Plc, according to data compiled by Bloomberg.

Some, however, appear to be betting that the optimism has already been priced in: Lilly shares closed at $757.78 on Thursday, compared to the average analyst price target of $756.14.

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.

(Credit: Adobe Stock)

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