Eli Lilly (NYSE: LLY) has achieved several impressive milestones over the past five years, including becoming the first healthcare company to reach a $1 trillion market cap. And over this period, the stock has delivered outstanding returns.
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To illustrate just how impressive Eli Lilly’s performance has been, consider that if you had invested $10,000 in the stock five years ago, you’d have about $54,477 today, given the company’s 40.36% average annual return over this period (the amount includes dividend reinvestment). By contrast, if you had put that $10,000 into an ETF that perfectly matches the returns of the S&P 500, you’d have $17,940 today. That’s not bad at all. But the index’s returns over the past five years pale in comparison to Eli Lilly’s. Of course, investors want to know whether the pharmaceutical giant can keep going. There are good reasons why the answer to that question is a resounding yes.
Eli Lilly is one of the leaders in the rapidly growing GLP-1 market. The company’s most important medicines are recording outstanding sales growth, and it boasts a deep pipeline — that is arguably second to none — in its core therapeutic area. Further, Eli Lilly has a vast pipeline in other areas and could make significant progress over the next few years, resulting in a much more diversified lineup of approved drugs. Even with mounting competition in the GLP-1 industry, Eli Lilly’s prospects look attractive. I wouldn’t expect the stock to deliver average annual returns of about 40% through 2031, but the healthcare leader still seems well positioned to beat the broader equity market.
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