A little over a year ago, weight-loss drugs were all the rage.
Ozempic ads were popping up everywhere, and Mounjaro was almost as ever-present. And we all suddenly knew someone who was taking a weight-loss drug – maybe you started taking one yourself! Having punctured the mainstream and become part of the national zeitgeist, weight-loss drugs were also all the rage on Wall Street. And that was reflected in the share prices of the purveyors of the aforementioned brands (plus Wegovy and Zepbound): Eli Lilly (LLY) and Novo Nordisk (NVO).
Both those weight-loss drug stocks peaked in Summer 2024. NVO shares had nearly tripled over the previous two years, topping out at more than 140 in June 2024. LLY reached an apex of 960 a share in August 2024, having more than tripled from 300 a share in August 2022. Both stocks were must-owns – LLY and NVO were both in my Cabot Stock of the Week portfolio.
And then? Well….
Okay, so the LLY stock chart (which spans the 14 months since it peaked) doesn’t look terrible, mostly because it’s bounced back strongly since the beginning of August. The NVO chart, on the other hand, is pretty grim – it’s fallen 60% in the last 16 months. And yet … weight-loss drugs are as popular as they’ve ever been. Those Ozempic and Mounjaro ads haven’t gone away, and Wegovy and Zepbound have joined them in the mainstream. More people are taking the drugs than ever before, as prices have become more affordable. But the GLP-1 buzz, at least in investing circles, is gone. And the two aforementioned weight-loss drug stocks have exited the “romance” phase of their life cycles, and instead entered the “reality” phase.
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And in reality, both stocks look like relative bargains right now. But which is the better bargain? Let’s break it down.
Tale of the Tape: Eli Lilly (LLY) vs. Novo Nordisk (NVO)
Trailing P/Es: LLY 54, NOV 15
Forward P/Es: LLY 27, NVO 14
Estimated 2025 sales growth: LLY 37%, NVO 8%
Estimated 2025 EPS growth: LLY 74.6%, NVO 3.8%
Cash per share: LLY $3.95, NVO $4.26
Institutional ownership: LLY 83.6%, NVO 9.4%
In terms of value, NVO has LLY beat by a mile, trading at less than a third of LLY on a trailing price-to-earnings basis and roughly half of it on a forward price-to-earnings basis. Novo Nordisk also has way more cash, with nearly $19 billion total (Eli Lilly has just $3.55 billion) and 31 cents more per share. But it’s not growing nearly as fast as Eli Lilly, on either the top or bottom line.
And while the Grand Canyon-esque chasm in institutional ownership suggests NVO has far more potential upside if Wall Street latches on … so far, that’s not happening, as the institutional ownership percentage is a fifth of what it was at its June 2024 peak. That’s a mass exodus, and one that ended just recently. While Wall Street abandoned ship on LLY shares too, Lilly’s institutional ownership percentage was only sliced in half, and it has since bounced back to its highest point since April. As a result, LLY shares have built up some real momentum of late, up 9% in the last month. NVO, meanwhile, has been stagnant over the past month.
Ozempic and Wegovy sales are expected to reach record levels this year. Revenue from Wegovy, in fact, expanded by 56% in the first half of the year. But sales of Ozempic, which accounts for a much bigger slice of Novo Nordisk’s revenue pie, improved by a mere 8% in the first half, well below estimates. Together, those two weight-loss/diabetes drugs accounted for 60% of Novo’s total revenue last year. Hence, the mere 8% revenue growth expected for the Danish drugmaker this year.
Mounjaro and Zepbound, on the other hand, are still growing revenues at breakneck speeds, with Mounjaro sales up 68% in the second quarter, while Zepbound’s sales more than doubled, up 172% year over year. In addition, those two weight-loss/diabetes drugs account for less than half (48%) of Eli Lilly’s total sales. A new drug called donanemab, designed to treat patients with Alzheimer’s and which gained FDA approval in July 2024, has blockbuster potential for Eli Lilly. It also has Trulicity (for diabetes), Taltz (for autoimmune diseases) and Verzenio (a cancer treatment), among others, in its deep drug portfolio. Eli Lilly is, thus, less dependent on its obesity drugs than Novo Nordisk.
And the Winner Is….
Bottom line: Eli Lilly is a more diversified and much faster-growing company than Novo Nordisk. It has earned its higher valuation, and its shares have greater momentum than NVO right now. So while NVO may technically be the better value opportunity, LLY looks like it’s clearly the better stock right now. If you’re looking to regain exposure to the still-fast-growing weight-loss drug sector now that share prices among its two dominant players have come crashing back to much more reasonable levels, LLY is the best way to do it.
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