In this piece, we will take a look at the ten best weight loss drug stocks to buy now. If you want to skip our introduction to the rising weight loss drug industry and how it's one of the biggest trends on the stock market right now, then you can take a look at the 5 Best Weight Loss Drug Stocks to Buy Now.
While it's artificial intelligence that has dominated the stock market when it comes to technology stocks, in the non technology sector, it's weight loss drugs that are all the hype. The close of 2023 has seen Americans finally able to get their hands on a one stop solution for weight loss, which in turn has sent the shares of the firms that manufacture and sell these drugs skyrocketing. In fact, this trend is so strong that it's made some even wonder whether we'll see a non tech trillion dollar valuation soon as well.
At least this is what the investment bank Morgan Stanley believes about one of the premier weight loss drug stocks right now. This stock is Eli Lilly and Company (NYSE:LLY), and its latest market capitalization sits at a cool $745 billion. While Eli Lilly is in the news these days because of its weight loss drugs Mounjaro and Zepbound, it's one of the oldest pharmaceutical companies in the world since it was set up in 1876. So where does Morgan Stanley factor in all of this? Well, the shares currently trade at $784, and when combined with the outstanding shares of 950 million, this gives us the market cap figure quoted above.
The average analyst share price target for Eli Lilly and Company (NYSE:LLY) is $818, and the street high share price target of $1,000 means that should the stock hit this price, then it will just be $53 short of making Eli Lilly the first non tech stock on Wall Street to have scored a market capitalization of $1 trillion. This conclusion was also on Morgan Stanley analyst Terence Flynn's mind in February 2024, roughly a week after Lilly reported its earnings report for the fourth quarter - a result card that saw it beat Wall Street revenue estimates of $8.95 billion by reporting $9.35 billion in the segment. On the day Flynn's note was released, the shares ended up closing at $782 - for a 21.4% upside over Morgan Stanley's Eli Lilly and Company (NYSE:LLY) share price target of a cool $950.
Looking at this, it's clear that when it comes to personal health and wellness products, weight loss drugs are the artificial intelligence of the stock market. Naturally, this means that weight loss drug stocks have also stunned investors and observers with their strong returns, and apart from Eli Lilly's 148% share price gains since early March 2023, other weight loss drug stocks such as Novo Nordisk A/S (NYSE:NVO) and Roche Holding AG (OTC:RHHBY) are examples of how despite euphoria investors are still only rewarding those weight loss drug stocks that have a clear pathway to the market and a potential to sell their products.
For instance, apart from Lilly, the hottest weight loss drug on the market is Novo Nordisk. Naturally, since its products are already available in the market, the shares are up by a hefty 73% since March 2023. However, Roche hasn't fared so well despite its announcement of entry into the weight loss market last year. While Roche has agreed to buy the Berkeley, California based pharmaceutical firm Carmot Therapeutics, the stock isn't up by much since the transaction was announced in December 2023, as investors are waiting to see if the multi billion dollar deal can provide any realizable benefits in the form of market penetration.
Yet, while Roche might not be seeing love from Wall Street these days, what most people don't know is that it's actually one of the oldest weight loss stocks on the market right now. Surprised? Well, consider an FDA approval from 1999 which saw the Swiss pharma giant's Xenical secure approval as a drug that could help the body reduce its fat absorption by as much as 30%. Seems like weight loss drugs might not be all that new, and looking at Xenical's fate might also help us determine whether the weight loss drug stocks of today will be giants of tomorrow or not. So, what happened to Xenical? Well, the latest bit on this front comes from a Financial Times report which shares that Roche was sanctioned in 2008 for improperly selling the product to weight loss clinics in a manner that highlighted "disregard for patient care."
Finally, before we head toward our list of the best weight loss drug stocks, here's what Polen Capital had to say about Novo Nordisk in its Q4 2023 investor letter:
As we discussed in last quarter’s commentary, Novo Nordisk is a newer addition to the strategy. Over the fourth quarter, we continued to build the position to an average weight. As a reminder, Novo Nordisk is a global pharmaceutical company based in Denmark and has long been the leader in developing insulin for diabetes patients. In recent years, the company’s innovation into GLP-1 drugs has been shown not only to help diabetics control blood sugar levels but also to have significant efficacy in weight loss. Obesity has become a global epidemic, creating materially negative knock-on effects for humans that range from an increase in cardiovascular events and, thus, higher mortality to a lower general quality of life. We believe that, over time, payors will recognize the value of these obesity treatments to both patients and the overall healthcare system.
So, which are the hottest weight loss drug stocks that hedge funds are buying? Some notable picks are Merck & Co., Inc. (NYSE:MRK), Eli Lilly and Company (NYSE:LLY), and Amgen Inc. (NASDAQ:AMGN).
To make our list of the best weight loss drug stocks, we ranked the U.S. listed stocks in Bank of America's list of stocks that are either directly developing weight loss drugs or associated products such as diabetes medicine by the number of hedge funds that had bought the shares in Q4 2023. This list was further augmented by some other stocks that might benefit from the weight loss drug trend.
For these best weight loss drug stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Viking Therapeutics, Inc. (NASDAQ:VKTX) is a small biotechnology company headquartered in San Diego, California. Its weight loss drug VK2735 showed some promise in early trials in March 2024 when Viking Therapeutics, Inc. (NASDAQ:VKTX) shared that some patients had reduced their weight by 3.3% after taking it.
25 out of the 933 hedge funds profiled by Insider Monkey during Q4 2023 had bought and owned Viking Therapeutics, Inc. (NASDAQ:VKTX)'s shares. Andreas Halvorsen's Viking Global owned the biggest stake which was worth $95.7 million.
Viking Therapeutics, Inc. (NASDAQ:VKTX) joins Eli Lilly and Company (NYSE:LLY), Merck & Co., Inc. (NYSE:MRK), and Amgen Inc. (NASDAQ:AMGN) in our list of the top weight loss drug stocks on the hedge fund radar.
Sanofi (NASDAQ:SNY) is one of the more controversial weight loss drug stocks on our list. This is because while its traditional products have run into barriers from regulatory authorities, its CEO stressed at a conference in January 2024 that his company is still seeking to develop next generation weight loss drugs if the right opportunity is present according to a report from pharma industry publication Endpoints News.
For their December quarter of 2023 shareholdings, 32 out of the 933 hedge funds profiled by Insider Monkey were the firm's investors. Out of these, the biggest Sanofi (NASDAQ:SNY) shareholder is Ken Fisher's Fisher Asset Management as it owns $710 million worth of shares.
GSK plc (NYSE:GSK) is one of the biggest pharmaceutical companies in the world. Its weight loss drug Tanzeum is also a GLP-1 medicine which is the broader category in which most current weight loss drugs belong.
By the end of last year's fourth quarter, 40 out of the 933 hedge funds tracked by Insider Monkey had bought and owned GSK plc (NYSE:GSK)'s shares. Ken Fisher's Fisher Asset Management was the firm's biggest investor due to its $557 million stake.
AstraZeneca PLC (NASDAQ:AZN) is a British healthcare company headquartered in Cambridge, United Kingdom. It raised the temperature in the weight loss drug market in November 2023 after revealing a $2 billion price tag for a deal for a Chinese company's weight loss solution.
For their December quarter of 2023 investments, 48 out of the 933 hedge funds part of Insider Monkey's database had invested in the firm. AstraZeneca PLC (NASDAQ:AZN)'s largest hedge fund shareholder among these is Rajiv Jain's GQG Partners as it owns $933 million worth of shares.
Novo Nordisk A/S (NYSE:NVO) is the premier weight loss drug stock that's all the hype on the stock market these days. It is currently battling claims by Senator Bernie Sanders which accuse the firm of overcharging and "ripping off" Americans.
58 out of the 933 hedge funds profiled by Insider Monkey during Q4 2023 were Novo Nordisk A/S (NYSE:NVO)'s shareholders. Ken Fisher's Fisher Asset Management owned the biggest stake which was worth $1.4 billion.
Merck & Co., Inc. (NYSE:MRK), Novo Nordisk A/S (NYSE:NVO), Eli Lilly and Company (NYSE:LLY), and Amgen Inc. (NASDAQ:AMGN) are some top hedge fund weight loss drug stock picks.
