Each quarter, investment firms managing over $100 million are required to file an itemized breakdown of the stocks they bought and sold during the most recent quarter. These filings are more formally known as a form 13F.
During the third quarter, Israel "Izzy" Englander of Millennium Management increased the firm's stake in pharmaceutical giant Eli Lilly (LLY -0.24%) by 86% -- scooping up approximately 458,000 shares in the process.
For a fund such as Millennium, this isn't necessarily a major purchase for the portfolio. Nevertheless, I see Englander's decision to raise his position in Lilly as a wise choice. Below, I'm going to break down why I see Lilly as a once-in-a-decade investment opportunity, and outline why now appears to be a lucrative time to follow Englander's moves.
Why is Eli Lilly a once-in-a-decade opportunity?
Eli Lilly has a lot going for it. Right now, the company's largest tailwind hails from an impressive combination of weight loss medications that are used to treat diabetes and obesity. Known as glucagon-like peptide-1 (GLP-1) agonists, Lilly's Mounjaro and Zepbound have both become multibillion-dollar drugs over the last couple of years.
While it's clear that Mounjaro and Zepbound have proven successful, I think both treatments have a long runway ahead. For starters, J.P. Morgan estimates that the total addressable market for GLP-1 medications treating diabetes and chronic weight management will reach $100 billion by 2030.
One nuance I'd like to point out with regards to this forecast is that GLP-1 agonists are believed to have applications that span beyond weight loss. Lilly's primary competitor in the weight loss realm, Novo Nordisk (which makes Ozempic and Wegovy), has already received an expanded indication to treat patients with obesity who are also at risk of cardiovascular disease. To me, the GLP-1 market could be worth well in excess of $100 billion in the long run as these medications receive additional approvals for other treatments.
Outside of weight loss, Lilly has also been making waves across other pockets of the healthcare landscape. Just this year the company received FDA approval for its Alzheimer's drug candidate as well as a new eczema treatment, Ebglyss.
There are two reasons I see these approvals as important milestones. First, adding Alzheimer's and eczema to its medical portfolio further diversifies Lilly's business as a whole -- which already includes treatments for cancer, plaque psoriasis, and of course weight loss.
In addition, both the Alzheimer's and eczema markets are somewhat fragmented. This provides an opportunity to carve out its own unique pocket of these respective markets -- which combine for a total addressable opportunity in excess of $60 billion.
While Lilly appears to be firing on all cylinders, investors might be wondering how long the company's growth can actually last. Well, in my eyes the answer is a long time. Earlier this year, Lilly announced a multibillion-dollar investment into a new manufacturing and research facility.
Although Lilly has several catalysts across many different aspects in the healthcare industry, I am of the opinion that the company has barely even scratched the surface in terms of scaling these new opportunities. I see the company's decision to continue investing in manufacturing and research as a commitment to long-term sustained growth and innovation.
Image source: Getty Images.
Is Eli Lilly stock a buy right now?
For much of 2024 shares of Lilly were rocking on the heels of investor enthusiasm surrounding the weight loss market and news of the company's drug approvals in Alzheimer's and eczema. However, since publishing a disappointing third-quarter earnings report a few weeks ago, Lilly stock has entered a free fall. Lilly stock is down 19% in just the last month, and has fallen by 8% just in the month of November.
While it may be difficult to admit, a sell-off in Lilly stock is probably healthy at this point. Prior to reporting earnings on Oct. 30, shares of Lilly had gained 45% since the beginning of the year.
The stock was undoubtedly getting pricey by traditional valuation standards, and candidly, it was only a matter of time before investors started to sell. With all of that said, I remain bullish on Lilly's long-term narrative and see now as an incredible time for long-term investors to pounce on the stock and buy the dip in Eli Lilly.
