Eli Lilly shares surged to an all-time high Tuesday after JPMorgan raised its price target to $1,400, citing the company's dominant position in the expanding obesity drug market. The stock's rally was further fueled by disappointing trial results from IPO stock Kailera Therapeutics, whose weight-loss pill showed lower efficacy and higher rates of nausea than Lilly's Foundayo.
Eli Lilly shares surged to an all-time high Tuesday after JPMorgan raised its price target to $1,400, citing the company's dominant position in the expanding obesity drug market. The stock's rally was further fueled by disappointing trial results from IPO stock Kailera Therapeutics, whose weight-loss pill showed lower efficacy and higher rates of nausea than Lilly's Foundayo.
Eli Lilly shares rose 3% to a record 1,235.56, pushing its market capitalization past $1.1 trillion after JPMorgan issued a bullish upgrade.
"The rapid expansion of the US weight-loss drug market and strong international growth will drive Lilly's sales and profits sharply higher," Chris Schott, analyst at JPMorgan, said.
Schott raised his price target to $1,400 from $1,300, implying more than 13% upside from Tuesday's close. He expects the drugmaker's second-quarter earnings, due Aug. 5, to exceed consensus estimates.
The rally also got a boost from Kailera Therapeutics, whose experimental weight-loss pill showed lower efficacy and higher rates of nausea and vomiting compared with Lilly's Foundayo. Kailera shares fell 4.6% to 22.24.
Patients with obesity who took the Kailera drug, developed with partner Hengrui Pharma, lost an average 9.5% to 10.9% of their body weight over 44 weeks, compared with 2.5% for the placebo group. By comparison, Lilly's Foundayo led to 11% weight reduction over 72 weeks, while Novo Nordisk's Wegovy pill achieved 13.6% over 64 weeks in late-stage studies.
William Blair analyst Andy Hsieh said he was "particularly alarmed" by the nausea rate. Seven in 10 patients experienced nausea with the Kailera drug, versus 16% of placebo recipients, while 67% to 69% reported vomiting, compared with 4.5% in the placebo group. There were no episodes of drug-induced liver injury, a concern given the drug uses the same molecular scaffold as Pfizer's defunct danuglipron.
Novo Nordisk shares edged nearly 1% higher to 46.64. Viking Therapeutics, which is also developing an oral weight-loss treatment, jumped 8.8% to 42.13, approaching a buy point at 43.15.
The GLP-1 Bridge program, which began July 1, made Zepbound and Foundayo available to eligible Medicare patients for as low as $50 per month. An estimated 20 million Medicare patients could meet the criteria for obesity drugs, according to JPMorgan.
The analyst upgrade and competitor setback reinforce Lilly's leadership in the obesity treatment market, which is projected to exceed $100 billion in annual sales. Investors will watch Lilly's second-quarter earnings report on Aug. 5 for updated guidance on production capacity and international expansion.
This article is for informational purposes only and does not constitute investment advice.
