Bank of America analysts raise Eli Lilly price target amid obesity drug optimism

Investing.com -- Analysts at Bank of America Securities have lifted their price target for Eli Lilly (NYSE:LLY), citing the potential of the U.S. pharmaceutical giant's weight-loss drugs and its pipeline of treatments for other ailments.

Lilly is in a race with Danish rival Novo Nordisk (CSE:NOVOb) to serve a market for so-called GLP-1 agonists, a class of obesity drugs, which some analysts believe could reach a value of $100 billion annually.

Earlier this week, Lilly Chief Executive David Ricks said its blockbuster Mounjaro medicine is expected to launch in India next year following the clearing of a regulatory review, Reuters reported. Meanwhile, Britain became the fourth European country to introduce the diabetes drug and obesity treatment last month.

The BofA analysts noted they now project that sales of tirzepatide, the chemical name for Mounjaro, will grow from $15 billion this year to over $60 billion in 2030.

"We acknowledge there’s wood to chop on access/manufacturing capacity, but we’d argue our forecasts are still conservative, as by 2030, we assume [less than] 7% of US adults will be on a GLP-1 for obesity (includes competitors)," the BofA analysts said in a note to clients on Friday.

They argued Lilly could also be boosted by its possible treatments for heart disease, obstructive sleep apnea, and liver disease, calling them "vastly underappreciated." The analysts subsequently raised their price objective for Lilly to $1,000 from $800 and maintained a "Buy" rating.

"[W]e expect continued strength in shares given a scarcity of high growth stories in Healthcare [...] along with upward commercial momentum throughout 2024," they said.