Stock buy on the dip?
Eli Lilly’s Position in the Anti-Obesity Market
Eli Lilly is currently well-positioned to maintain its leadership in the anti-obesity market. The company’s newer products in this niche are expected to help expand its reach and solidify its position as a key player. Beyond its core area, Eli Lilly has an attractive lineup and pipeline that could provide additional growth opportunities.
After becoming the first healthcare stock to hit a $1 trillion market valuation in late 2025, Eli Lilly has not performed well since, with its shares down about 19% from their 52-week high of $1133.95. Some investors are concerned about the company’s high valuation, while others worry that increased competition could erode its pricing power and negatively impact its profits and margins. However, there are also those who believe that Eli Lilly’s strong position in the weight management space could lead to long-term gains.
The Expanding Anti-Obesity Market
Although there will likely be more competition in chronic weight management, Eli Lilly’s lead in this space seems secure. Newer launches, such as orforglipron, an oral GLP-1 candidate, are expected to help the company strengthen its top position and expand its addressable market. Orforglipron is set to launch in the second quarter and could become a best-in-class medicine due to its strong clinical trial performance across both diabetes and obesity.
Orforglipron is particularly appealing because it is the only oral therapy currently approved for weight loss, which may attract new patients who prefer not to take older subcutaneous weight-loss medications. In head-to-head studies with other oral GLP-1s, orforglipron has shown superior results.
Another candidate, retatrutide, could target an underserved niche. In a phase 3 study, retatrutide led to an outstanding 28.7% mean weight loss after 68 weeks, a number never before seen in a phase 3 clinical trial. Additionally, it significantly reduced knee pain. Eli Lilly plans to target patients with high body mass indexes, who often experience plateaus with current weight-loss options.
Beyond Weight Management
Even if the market for anti-obesity medicines does not reach the peaks some analysts anticipate, Eli Lilly is prepared for this scenario. Unlike its biggest rival, Novo Nordisk, Eli Lilly already has billion-dollar drugs outside its core therapeutic area. For example, Verzenio, a cancer drug, generated $5.7 billion in sales last year, up 8% year over year. Taltz, an immunosuppressant, saw sales grow by 9% year over year to $3.6 billion.
While these contributions are smaller compared to Eli Lilly’s diabetes and obesity products, the company has been actively expanding beyond weight management. It now has a deep pipeline of candidates across various fields, including pain management, oncology, and immunology. These efforts are aimed at ensuring continued growth and diversification.
Valuation and Investment Considerations
Eli Lilly currently trades at 27x forward earnings, compared to the healthcare sector’s average of 17.1x. Considering its faster revenue and earnings growth compared to similarly sized peers, along with a deep pipeline that should drive medium-term growth, many believe the premium is justified. The stock appears attractive at this point.
However, before investing in Eli Lilly, it is important to consider alternative perspectives. The Motley Fool Stock Advisor analyst team recently identified what they believe are the 10 best stocks for investors to buy now, and Eli Lilly was not among them. The 10 stocks on the list have the potential to deliver significant returns in the coming years.
For example, Netflix made the list on December 17, 2004. If you had invested $1,000 at the time of the recommendation, you would have $495,179 today. Similarly, Nvidia made the list on April 15, 2005, and an investment of $1,000 would now be worth $1,058,743.
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Prosper Junior Bakiny has positions in Eli Lilly and Novo Nordisk. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
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