Why April Could Be a Huge Month for Eli Lilly Stock

Eli Lilly (NYSE: LLY) is the most valuable healthcare company in the world, worth more than $700 billion. Over the past 12 months, however, the stock's performance has been fairly lackluster, rising by just around 6%. Investors are beginning to scoff at its expensive price tag, with Eli Lilly trading at more than 70 times its trailing earnings.

But there could be a big catalyst ahead in April, which may trigger a broad rally for the stock.

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Eli Lilly may soon release data on its weight loss pill

A key drug that investors are going to be following this year is orforglipron, a once-daily pill that Eli Lilly is developing for weight loss and other indications. The early data has been encouraging, but the numbers which it will post from phase 3 trial results in the months ahead could indicate how likely it is that regulators will approve the drug.

The healthcare company will report on several phase 3 trials involving the drug this year, including how effective it is for treating diabetes, weight loss, and sleep apnea. The first of these trials is set to complete in April, which will show how effective the drug is for people with type 2 diabetes in helping them manage their glucose levels. Strong numbers here could set the stage for approval for orforglipron for a major indication.

Meanwhile, the first major obesity-related phase 3 trial for orforglipron is set to complete in July. If the data from the diabetes trial looks good, investors may expect that the weight loss data will also be strong as effective diabetes treatments usually help patients lose weight.

The company has already been delivering fantastic results due to its highly effective weight loss treatments

In just the past five years, shares of Eli Lilly are up around 500%. It has generated amazing returns for investors, largely due to the excitement surrounding its potential in the obesity drug market, which could easily top $100 billion in the future and even go much higher than that.

Eli Lilly has been experiencing significant growth, with sales soaring by 45% in its most recent quarter (which covered the last three months of 2024). Adding a weight loss pill into the mix to complement its already successful weight loss injectable in Zepbound could mean a further acceleration in its already strong growth rate.

LLY Operating Revenue (Quarterly YoY Growth) data by YCharts.

Paying 70 times earnings for the stock may be more tenable if it's able to generate these types of numbers and if investors are expecting much more growth ahead.

Why Eli Lilly could make for a solid pick for the long term

Eli Lilly is looking to be a big player in the obesity drug market, and that makes it an exciting growth stock to buy and hold. The business is solid and features many strong drugs in various therapeutic areas, but it's undeniably the potential in weight loss that has investors so bullish on its prospects.

The stock's performance in recent months hasn't been all that exciting, but positive news related to orforglipron this month could be what ignites the stock and starts a rally. Although it may appear to be an expensive stock to own, given its opportunities in obesity market in the long run, today's valuation and price could still look cheap years from now.

As long as you are willing to be patient, now may be an excellent time to add Eli Lilly stock to your portfolio.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.