2 Brand-New Reasons to Buy Eli Lilly Stock Right Now, and 2 Reasons to Be Cautious

Core Viewpoint - Eli Lilly is experiencing significant growth driven by its diabetes drug Mounjaro and weight loss drug Zepbound, but there are concerns about sustaining this growth and the company's high valuation [2][8][10]. Group 1: Growth Drivers - Eli Lilly's operating income has increased by 90.7% over the last three years, reaching $15.1 billion, largely due to the success of Mounjaro and Zepbound [2]. - The company is investing heavily in manufacturing, with a recent$3 billion expansion in Wisconsin, bringing total investment in the site to $4 billion, indicating expectations for increased demand [3][4]. - Clinical trials suggest Zepbound is more effective for weight loss than its competitor Wegovy, with patients losing 47% more weight after 72 weeks, which could enhance market share [6]. Group 2: Cautionary Factors - There are signs that the rapid growth may be slowing, as drug wholesalers purchased fewer doses of Mounjaro and Zepbound in Q3 compared to previous quarters [8]. - Management indicated that wholesalers had previously stocked up on GLP-1 drugs, leading to a temporary inventory surplus, which may affect future sales growth [9]. - Eli Lilly's trailing P/E ratio is 86, indicating a high valuation that may lead to volatility if earnings do not meet investor expectations [10][11].