Investing

This Growth Stock Surged 63% in 2024. Here's Why 2025 Could Bring An Even Bigger Gain.

Chris MacDonald

Published: February 21, 2025 12:47 pm

The big pharma sector is one that’s generally fallen out of favor for many investors over the past few decades, as large healthcare companies have seen slower growth and consolidation hasn’t generally provided the kind of upside investors had grown accustomed to over the latter half of the past century.

That said, companies like Eli Lilly (NYSE:LLY) have increasingly come into focus for some growth investors, due to the rise of GLP-1 drugs. These drugs have the potential to improve the broader health of the general public, and have shown dramatic results in weight loss for individuals that continue to take these drugs over a prolonged period of time.

In addition to Novo Nordisk (which provides Ozempic), Eli Lilly and its Mounjaro weight-loss drug have seen incredible growth over the course of the past year. This surge in growth has led LLY stock to surge 63% in 2024.

But with this stock already up more than 12% on a year-to-date basis, the question is whether investors will be in for another repeat of 2024 (or a potential beat). Let’s dive into whether such performance is possible or likely.

Key Points About This Article:

• Eli Lilly is a stock that’s been on a tear over the past year, with its incredible upside performance tied to its GLP-1 drug Mounjaro.
• Let’s dive into what analysts believe could be in store for Eli Lilly over the course of the next year, and what investors may want to make of this move.
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Plenty of Growth Driving Upside Expectations Ahead

Investors are clearly pricing in a number of long-term growth catalysts into Eli Lilly’s forward valuation, with the company’s trailing and forward price-earnings multiples highlighting ample growth on the horizon. This upgrade in earnings expectations moving forward has been the key driver moving the needle for LLY stock of late, and it’s likely to be the key driver of continued upside ahead. On a forward basis, Eli Lilly’s stock trades at around 37-times earnings, with trailing earnings coming in around 73-times.

In other words, the market expects Eli Lilly to roughly double its earnings over the course of the next year.

The company’s impressive growth seen in its innovative diabetes and weight loss treatments, particularly Mounjaro and Zepbound, continue to be the key focus of investors. And how these products perform over the course of the coming quarters will be key to watch. 

Thus far, investors have only seen better-than-expected numbers on its key weight loss drugs, and the market appears to be expecting more beat-and-raise quarters ahead.

Analyst Forecasts for 2025

Retail investors aren’t the only ones bullish on Eli Lilly’s growth prospects moving forward. Indeed, Wall Street analysts are very optimistic about Eli Lilly’s prospects for 2025, anticipating significant growth driven by its innovative drug portfolio. Currently, the consensus analyst price target for LLY stock sits at $1,015 per share, reflecting upside of roughly 17% from here.

Analysts are clearly seeing what the rest of the market is seeing in terms of Eli Lilly’s growth drivers. The company’s continued success in the diabetes and weight-loss drug markets, particularly with products like Mounjaro and Zepbound, will continue to drive upside revisions, so long as growth continues to come in higher than expectations.

Right now, analysts at Citi are forecasting robust earnings growth of 19% in 2025 for the healthcare sector, which should drive fundamental growth across Eli Lilly’s broader business. However, heightened growth from the company’s GLP-1 product portfolio, and continued innovation around other key drugs, has led to much higher-than-industry growth expectations, which many expect to continue on an ongoing basis. 

For 2025, Eli Lilly is projected to see its revenue increase to approximately $58.6 billion, alongside expected EPS of $19.11.

Will 2025 Bring About Even Bigger Gains?

Past performance is certainly no guarantee of future success. I think for companies like Eli Lilly that have so much future growth already baked into their valuations, the reality is that making a fundamental case to buy this stock at 74-times trailing earnings becomes a difficult one. That goes double for those projecting an even better year in terms of price performance ahead.

Of course, it’s entirely possible that the underlying growth Eli Lilly has seen over this past year could just be ramping up. As more supply comes on the market, and Eli Lilly potentially takes market share in the GLP-1 space, it’s possible that the market could be underestimating this growth. Importantly, the GLP-1 growth Eli Lilly has seen is just one part of its portfolio. If other segments heat up, and the company can see continued pipeline growth, anything is possible.

Moreover, Eli Lilly’s stock performance has sparked speculation about a potential split, though its last split occurred in 1997. So, there are plenty of potential catalysts ahead.

Given the company’s current valuation, this is one I think is unlikely to repeat in 2025. But it’s also a stock I think is worth buying on pullbacks for the long-term, and I’ll be keeping LLY on my watch list for this reason.