Prediction: This Is What a $5,000 Investment in Eli Lilly Will Be Worth in 2031
- LLY
- NVDA
- ^GSPC
If you had invested $5,000 in Eli Lilly (NYSE: LLY) five years ago, you’d be sitting pretty today. The stock has delivered a compound annual growth rate (CAGR) of 35.86% over this period (as of writing), turning $5,000 into about $23,143. This is much better than the S&P 500‘s 12.82% CAGR since 2021, which would have grown $5,000 into $9,139. While Eli Lilly’s performance in recent years has been impressive, it’s much more important to try to determine whether the drugmaker can also beat the market going forward. Here’s my prediction for Eli Lilly through 2031.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Is it too late to buy?
One interesting feature of the pharmaceutical industry is that companies often experience substantial gains from clinical and regulatory progress before even generating significant sales for leading candidates. That’s what happened to Eli Lilly. Even before tirzepatide’s approval, analysts had high hopes for the medicine. Tirzepatide is currently Eli Lilly’s most important growth driver and is sold under the brand names Mounjaro (for diabetes) and Zepbound (for weight management in some regions).
The medicine was first approved in 2022 and is already the world’s best-selling compound. Tirzepatide has arguably exceeded expectations, driving Eli Lilly’s sales and stock price higher. But it could run into several issues in the medium term. Other companies will launch competing weight-loss medicines, potentially leading to lower tirzepatide sales (due to decreased sales volume and lower realized prices). Eli Lilly’s revenue and earnings have grown at rates well above average for pharmaceutical giants over the past five years.
The drugmaker is unlikely to maintain this pace through 2031.
That said, there are also reasons to be bullish on the stock. Let’s consider three of them. First, even with increased competition in its core GLP-1 area, this corner of the pharmaceutical industry is projected to grow rapidly over the next five years (and likely beyond). Some medicines will compete directly with Mounjaro and Zepbound, but the market will also expand as breakthroughs open new opportunities.
Take Eli Lilly’s Foundayo, an oral weight loss GLP-1 medication that earned approval in April. The company noted that 80% of Foundayo’s prescriptions were for patients who had never taken GLP-1s before.
