Yahoo Finance Does Eli Lilly and Company (LLY)’s Financial Performance Make It A Safe Stock To Invest In Now?
We recently compiled a list titled Starter Stock Portfolio: 10 Safe Stocks To Invest In Now. In this article, we are going to take a look at where Eli Lilly and Company (NYSE:LLY) stands against the other safe stocks to invest in.
The Market Outlook for the Rest of 2024
A probable rate cut has provided hope for the economy. Despite that, the impact on financial markets and stocks remains uncertain. On September 4, Adam Parker, Trivariate Research founder and CEO, appeared in an interview on CNBC. Parker was not surprised that tech stocks were down by close to 4% at the beginning of September, that too right before an impending rate cut. Parker highlights that the inconsistency in the market at the moment is not normal, and with multiple rate cuts over the next two years, he has no reason to hold a positive economic outlook. He suggests that eight probable rate cuts indicate that the economy is slowing, consumer spending is declining, and unemployment is rising, all of which are not good signs for the market. The interviewer counter questions that eight rate cuts with a 25 basis point reduction are not as disastrous to presume a faltering economy. Parker then highlights that rate cuts in the past have been supported by consistent data, an incremental fiscal, and an expansion of the balance sheet, all of which are currently out of the picture. You can also read our piece on the best battery stocks to buy according to short sellers.
The Possible Impact of Rate Cuts on Stocks
On September 2, CNBC published a detailed report on the impact of rate cuts on the stock market in the United States. The Fed, in the footsteps of countries in Europe and Asia, recently announced an easing cycle, after a long period of high interest rates. As per current pricing data, the Fed is expected to have three 25-basis point cuts by the end of this year. Speaking of the global economic outlook, 2025 will see a lower-rate environment followed by easing inflationary pressures. However, the fear of recession in the United States tells another story. Analysts believe that the last four months of 2024 will be considerably weak and choppy amid geopolitical factors, uncertainty from the AI sector, corporate earnings, and most importantly, an overdue consolidation correction.
On September 3, JP Morgan reported that investors must not expect the cutting cycle to provide a fresh start to stocks. Leading strategists at the firm suggested that the rate cut cycle is rather reactive and is in response to a wilting economy, having little to no impact on stocks. Paul Christopher, head of global investment strategy, on the other hand, suggested that the market environment today resembles the market in 1995, increasing hopes for a market upside amid stable GDP strength and forecasts.
Bear market or bull market, certain stocks deserve a place in every investor’s portfolio. These are long-term opportunities to hold and will continue to provide superior returns, as they have for decades.
Our Methodology
To come up with the 10 safe stocks to invest in now, we looked for well-established companies in the energy, finance, healthcare, technology, and fast-moving consumer goods (FMCG) industries. These stocks have a history of performing well and boasting consistent financial results, making them ideal and safe long term investments for beginners. We then picked the top 10 stocks that were the most widely held by money managers and ranked them in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 100
Eli Lilly and Company (NYSE:LLY) ranks as the 10th safest stock to invest in now. Eli Lilly and Company (NYSE:LLY) is a pharmaceutical company that sells products to 125 countries and has offices in 18 countries. The company produces and sells various medicines for serious illnesses including Mounjaro, Zepbound, and Verzenio, also referred to as the “blockbuster” medicines in the US.
Eli Lilly’s Zepbound, a medicine for patients with obesity or excess weight, brought in $1.2 billion in sales in the second quarter of 2024. Similarly, Mounjaro, an injection for adults with type 2 diabetes, logged in $3.1 billion in sales. With solid investments in research and development, Eli Lilly and Company (NYSE:LLY) has also been running trials to assess whether Tirzepatide can prevent the development of type 2 diabetes, rather than just treating it. Current trials reveal that the drug presented a 94% lower risk of progressing to diabetes among pre-diabetic adults who were overweight or obese.
In the second quarter of 2024, Eli Lilly and Company (NYSE:LLY) reported revenue worth $11.3 billion, up by 36% year-over-year, beating analyst estimates by $1.34 billion. The United States is the major market and accounted for nearly 64% of the company’s sales in 2023. In addition to that, the company’s products are gaining immense traction across the globe. Its new drug, Tirzepatide received approval on July 19th from National Medical Products Administration in China. Previously, the drug was approved by the European Union in April 2024, a breakthrough in the world of medicine.
Overall, Eli Lilly and Company (NYSE:LLY) is consistent with its financial performance and is also the giant behind some of the most important medicines in the United States. The company is notorious for rolling out new drugs regularly, which shows its commitment to healthcare.
Analysts are bullish on LLY and their 12-month high price target of $1,025 points to a 7% upside from current levels. In Q2 2024, 100 hedge funds owned stakes in Eli Lilly and Company (NYSE:LLY), with total stakes amounting to $16 billion. With nearly 5 million shares, Fisher Asset Management was the company’s leading stakeholder.
Baron Funds mentioned Eli Lilly and Company (NYSE:LLY) in its Q2 2024 investor letter:
“Shares of global pharmaceutical company Eli Lilly and Company increased on continued investor enthusiasm around GLP-1 drugs for diabetes and obesity. We remain shareholders. Lilly’s Mounjaro/Zepbound not only offers superb blood sugar control for diabetics but can drive 20%-plus weight loss and likely improve cardiovascular outcomes in both diabetic and non-diabetic obese patients. Lilly is developing next generation drugs, including retatrutide, which drives approximately 25% weight loss, and orforglipron, a daily pill that produces approximately 15% weight loss. In the U.S. alone, there are 32 million Type 2 diabetics and an additional 105 million obese patients who we estimate would qualify for GLP-1 drugs. Although supply and access are limited near term, we think GLP-1 drugs will become standard of care for both diabetes and obesity and will become a $150 billion-plus category. We see Lilly setting a high efficacy bar and capturing significant long-term market share. We think the adoption of GLP-1s will drive Lilly to triple total revenue by 2030.”
Overall LLY ranks 10th among the safe stocks to invest in. While we acknowledge the potential of LLY as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published on Insider Monkey.
