Eli Lilly’s 300% Rally Isn’t Over, Analyst Says: The Hidden Pipeline Beyond GLP-1

Eli Lilly’s 300% Rally Isn’t Over, Analyst Says: The Hidden Pipeline Beyond GLP-1

TREE NEWS reports: Eli Lilly has been one of the most spectacular stock stories of the past four years, delivering a cumulative gain of nearly 300% since its first GLP-1 drug won regulatory approval and pushing its market capitalization past $1 trillion. Yet even after that run, some Wall Street analysts argue the stock still has room to climb — and the reason may have less to do with obesity drugs than with the rest of the company’s pipeline.

Berenberg analyst Kerry Holford upgraded Eli Lilly to “Buy” from “Hold” this week, setting a price target of $1,400. In her view, the company’s growth rate through 2030 will remain significantly ahead of peers, powered by strong sales of already-marketed products and a deep bench of experimental drugs. While the market has fully embraced Lilly’s dominance in obesity, Holford contends investors are still underestimating the company’s R&D efficiency, the breadth of its pipeline, and the potential of its non-obesity business.

The GLP-1 Engine Keeps Humming

Lilly’s core growth driver remains its GLP-1 franchise. Mounjaro was approved for type 2 diabetes in 2022 and later as Zepbound for obesity. Prescription volumes for Zepbound have now surpassed Novo Nordisk’s Wegovy, making it the most-prescribed weight-management drug in the United States.

Holford acknowledges that investor expectations for Lilly to maintain its obesity-market leadership are already high — but she remains confident. She also points to the company’s oral GLP-1 drug, Foundayo, which is awaiting regulatory approval for diabetes. If approved, she believes it could “unlock substantial demand” and further expand the GLP-1 business.

The Underappreciated Non-Obesity Pipeline

Where Holford sees the real mispricing is outside obesity. The success of Mounjaro and Zepbound has given Lilly ample cash to invest in other therapeutic areas. By her estimate, the company has committed roughly $60 billion to more than 25 business-development deals this year alone. These include a deal worth up to $7.8 billion to acquire sleep-disorder drug developer Centessa Pharmaceuticals, up to $7 billion for cancer-drug developer Kelonia Therapeutics, and $3.8 billion for psychedelic-medicine developer AtaiBeckley.

“We believe this non-obesity pipeline is undervalued by investors,” Holford wrote.

At roughly 26 times forward earnings, Lilly trades at a premium to peers in the S&P 500 pharmaceutical index and above five of the “Magnificent Seven” technology giants. Holford argues that Lilly’s R&D efficiency and pipeline potential justify that valuation. As existing products scale and new drugs advance, the company’s growth narrative is shifting from a single GLP-1 story to a broader innovative-medicine business.

Market Implications

The upgrade and the accompanying thesis carry several implications across asset classes:

• Equities: A higher price target from a respected analyst can draw momentum money back into large-cap pharma. If Lilly’s non-obesity pipeline gains credibility, the stock could re-rate further, though its premium multiple leaves it vulnerable to any GLP-1 disappointment.
• Competitors: Novo Nordisk faces continued pressure as Zepbound leads in U.S. prescriptions. Any sign that Lilly’s oral GLP-1 wins approval could widen its lead.
• Bonds: Lilly’s cash generation supports its credit profile, but the scale of its M&A spending — roughly $60 billion committed — could influence leverage metrics and debt issuance plans.
• Biotech and M&A: The company’s aggressive dealmaking signals robust appetite for early-stage assets, a positive for biotech valuations and venture funding in areas like sleep, oncology and psychedelics.
• Commodities and FX: Demand for GLP-1 drugs has indirect effects on food and agriculture sentiment; a weaker dollar would flatter Lilly’s large overseas revenue base.

Key Takeaways for Investors

• Eli Lilly’s 300% four-year rally may not be over; at least one analyst sees the stock reaching $1,400.
• The bull case is broadening from GLP-1 obesity drugs to a diversified pipeline spanning sleep, cancer and psychedelic medicine.
• A premium valuation — about 26x forward earnings — means execution risk is high and any pipeline setback could be punished.
• Watch for regulatory decisions on the oral GLP-1 drug Foundayo and further M&A activity as signals of the company’s growth trajectory.