Eli Lilly's new diabetes drug could boost the stock, says SVB Securities

SVB Securities believes that the new diabetes drug by Eli Lilly might be able to address patients' obesity and might lead to more significant gains in the stock. David Risinger, an analyst, gave the stock an outperform rating and said that investors could not price the potential of Mounjaro or tirzepatide as obesity and diabetes treatment.

The Food and Drug Administration recently approved Mounjaro for treating Type 2 Diabetes and is further being looked into for treating obesity. The stock has a target of $341 by SVB Securities, marking a 14% upside since closing on Friday. The Eli Lilly shares have performed really well this year by being 8% up to date in the wake of the S&P 500 being down by 18%.

Analysts think Eli Lilly has more to gain, especially if tirzepatide affects weight loss and employers cover it. Historically, employers have shied away from covering drugs affecting obesity because they think of them as agents that do not yield measurable or meaningful health benefits.

The thing that stands out in tirzepatide is that it can transform the patient's health by making them lose weight significantly. SVB Securities is bullish on Eli Lilly beyond tirzepatide. It offers more treatments that address obesity and diabetes, also cardiovascular diseases. They are, however, skeptical about Eli Lilly's Alzheimer's treatment.

David Risinger stated that he is recommending LLY shares even though the stock has a high valuation due to the company's ability to change the obesity treatment game. He stated that it does not matter if the Alzheimer's treatment is a hit or not, and the company's future in the stock market looks bright.

The price of the stock rose by 1% in pre-trading on Monday.