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Morgan Stanley is not worried about Eli Lilly’s (NYSE:LLY) potential to generate further upside even after its recent rally, as the investment bank asked in a research note on Friday whether the weight-loss drugmaker could be the first to join the $1T club.
Fueled by strong demand for its diabetes and weight loss drugs, Mounjaro and Zepbound, Indianapolis, Indiana-based Eli Lilly (LLY) has more than doubled in value over the past 12 months, with its market capitalization exceeding $719B, ahead of Tesla (TSLA).
“Could Lilly be the first $1 trillion biopharma stock?” Morgan Stanley analyst Terence Flynn and the team questioned, adding, “We continue to see a path for further upside.”
With an Overweight rating on LLY, Morgan Stanley increased its price target on the stock from $805 to $950, which, according to Bloomberg, is the highest on Wall Street and implies about a $900B market cap.
LLY is currently the most valuable healthcare company in the U.S. and the ninth most valuable S&P 500 component, trailing tech giants such as Microsoft (MSFT) and Apple (AAPL), which have already surpassed the $1T milestone.
Its Danish rival Novo Nordisk (NVO), the maker of GLP-1s, Ozempic, and Wegovy, has become Europe’s most valuable company after an over 72% rise last year, as both capitalize on the surging popularity of the new GLP-1 class of drugs for diabetes and obesity.
The analysts project further upside for LLY in 2025 and beyond, citing its oral GLP-1 agonists, and make the case for why the stock deserves a premium multiple for its outer-year forecasts compared to historical multiples for pharma stocks.
Last month, Norges Bank Investment Management, the world’s largest sovereign wealth fund, projected that Eli Lilly (LLY) and Novo (NVO) could be the first healthcare stocks to achieve the $1T mark in market cap.
