To The Moon

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In the past 12 months, the stock price of $Eli Lilly(LLY)$ has skyrocketed to triple digits, and the most significant driving force behind this surge is weight loss drugs.

The weight loss drug market is poised to become a colossal $100 billion industry, and Eli Lilly's two weight loss drugs, Mounjaro and Zepbound, are both expected to become long-term blockbusters.

In the weight loss drug market, Eli Lilly and $Novo-Nordisk A/S(NVO)$ still hold the lion's share. But here's the kicker: Eli Lilly is poised to continue dominating this market in the future.

First, Mounjaro was approved to treat type 2 diabetes, but doctors often prescribe it as a weight loss drug, and it brought in more than $5 billion in revenue last year. Zepbound has only been on the market for a few weeks, but it already has more than $175 million in revenue.

Second, Eli Lilly is currently in the midst of a phase 3 clinical trial for an oral weight loss candidate, and this drug interacts with three hormones (compared to Mounjaro and Zepbound's two), potentially leading to even better weight loss results.

Finally, Eli Lilly's R&D spending as a percentage of revenue has skyrocketed, from 22.7% to over 27% last year, marking the highest level in at least 13 years. This underscores the company's determination to develop even better weight loss drugs, which will translate into increased profits.

What does this mean for Eli Lilly's stock?

Even though it's already surged nearly 120% in the past year, considering the current blockbuster weight loss drugs and other upcoming drugs that will drive profit growth, there's still plenty of upside potential. So, Eli Lilly's stock is a great pick for long-term investors.