Easily one of the biggest trends right now in the field of medicine is the weight loss drug surge. Without attempting to sound cynical, the reality is that the sector enjoys a massive total addressable market. According to Axios, almost 115 million U.S. adults and children are obese. Prior efforts to address this situation have failed, leading to where we are now: a viable ecosystem for weight loss stocks.
Now, I’m no doctor and I’m not even going to pretend that I’m in any position to provide medical advice. This is absolutely not my area of expertise. However, it’s reasonable to state that every effort should be made to address obesity through natural means: dieting and exercising come quickly to mind. However, the pharmaceutical approach has merit.
If obese individuals continue to gain weight, it could lead to serious health consequences, such as diabetes and heart disease. Stated differently, the medicinal pathway is the lesser of two evils. And on that note, below are weight loss stocks to consider.
Novo Nordisk (NVO)
Based in Denmark, Novo Nordisk (NYSE:NVO) represents one of the top biotech firms in the world. Primarily, the company operates in two segments: rare diseases and diabetes and obesity care. Naturally, NVO stock has recently gained tremendous attention for the latter unit. In May of this year, CNBC reported that the company’s Wegovy drug maintained weight loss for up to four years. That’s obviously an encouraging news item.
Financially, Novo encountered a hiccup in the second quarter, when it posted earnings per share of 63 cents. This figure missed the consensus view of 65 cents. However, results improved from Q3 onward. Over the past year from Q1 2024, Novo generated an average EPS of 72 cents. This figure beat the collective consensus view of 69 cents, yielding an earnings surprise of 3.9%.
Right now, NVO stock trades hands at 16.8X trailing-year sales. That’s pricey. Plus, in the past year, the metric sat at 14.88X. However, analysts are also targeting fiscal 2024 sales to hit $42.33 billion, up 27.8%. Therefore, NVO still ranks among the top weight loss stocks to consider.
Eli Lilly (LLY)
Headquartered in Indianapolis, Indiana, Eli Lilly (NYSE:LLY) is another top enterprise in healthcare, falling under the drug manufacturing industry. The company discovers, develops and markets a wide range of human pharmaceuticals. However, it has attracted the spotlight for its diabetes and obesity unit. Specifically, the company has developed Zepbound for obesity.
As America’s waistline expands, Eli Lilly will likely see revenue streams in related units rise, making LLY one of the attractive weight loss stocks. Financially, the company stands on fertile ground. In the past year since Q1, it generated an average EPS of $1.82. This figure handily beat the consensus average view of $1.63, yielding an earnings surprise of 50.15%.
As you might imagine, LLY stock features a red-hot valuation premium, trading at 20.22X sales. For context, in the past year, the metric came in at 17.8X.
However, analysts also see strong growth in the next two years. By the end of fiscal 2025, EPS could be $17.07 on revenue of $46.9 billion. Last year, the pharma posted EPS of $6.32 on sales of $34.12 billion.
Viking Therapeutics (VKTX)
One of the most speculative ideas among weight loss stocks, Viking Therapeutics (NASDAQ:VKTX) is ideal for speculators. Per its public profile, Viking is a clinical-stage biopharmaceutical firm focused on the development of novel therapies for metabolic and endocrine disorders. Right now, the company doesn’t have any commercialized medicines. However, hope exists for its anti-obesity pipeline.
Much centers on VK2735, which is Viking’s lead candidate. The injection form of the drug appears to show strong results at a quicker rate. There’s also an oral tablet version, though this is still in early stage trials.
Financially, it’s difficult to assess the enterprise as it doesn’t generate revenue. That said, the company’s actual losses have come in narrower than what analysts had anticipated in the past year. Should one of its drugs become commercialized, the financial framework could change dramatically.
For now, it’s one of those wait-and-see opportunities. What makes VKTX stock so worthwhile, though, is that it enjoys a unanimous strong buy rating. Therefore, it’s one of the high-risk, high-reward weight loss stocks to keep on your radar.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
