hey everyone this is Dan I'll be talking about two pharmaceutical companies that have been doing very well because of the weight loss drugs they have been selling the two companies are Eli Lully stock symbol LL and Nova Nordisk stock symbol mvo as you can see on this chart LL went up 102% in the last year and mvo went up 82% in the last year when triple Q went up only 35% and spy was up only 26% we'll see why these two companies are doing so well and whether their stock prices will continue to go up if you like what you see here please click the like subscribe and notification buttons so that you'll be notified when I post new videos in the future thank you let's continue we have a lot of interesting stuff to cover Eli Lily has been selling the weight loss drug zap bound which cost $1,060 a month which is not cheap on average an adult loses 20.9% of their weight after taking this truck Nova nois has been selling the weight loss truck we GOI which cost $1,349 a month on average and a doll loses 15% weight after taking this druck according to UC Health today and many other news reports there has been a shortage of these weight loss drugs these weight loss drugs are originally developed to treat diabetes the FDA has also approved the drugs for treating obesity currently diabetic patients are given Priority Access to the drugs because of the shortage this Fortune magazine article said that the weight loss drug Market will grow from $ 6.15 billion in 2023 to 37.94 billion in 2032 because of the supply shortage both LL and mvo have been investing billions of dollars to increase their production capacities the added production volumes will come online between 2025 to 2029 other pharmaceutical companies are also developing similar weight loss drugs for example fiser has a weight loss drug in development which is in Phase 2B of the FDA approval process for drug to go from phase 2B to full FDA approval it typically takes about 2 to 3 years all these drugs in development are in Phase One or phase two that means for the next couple of years there will not be new competition for the drugs from LL and nvo a potential piece of bad news is that Joe Biden and Bernie Sanders recently said that the price the prices of weight loss drugs are unreasonably high at more than $1,000 a month it is therefore possible that the US government will put pressure on LL and mvo to reduce the prices similar to what the government has done to companies selling insulin according to this article by pharmaceutical technology the price of the weight loss drugs sold by llv and mvo are 10 times more expensive in the US than when they are sold in most European countries this study shows that since 2020 after the Biden Administration pled to reduce the price of insulin the actual price of insulin has been reduced by only 10.6% that means we're probably not going to see very dramatic price reduction of the weight loss drugs from llv or mvo anytime soon this is a list of the top drugs sold by LL Mount gereral and zap bound are the two new drugs for diabetes and weight loss they are of the same chemical composition their patent exploration will be in 2036 which is 12 years from today their 2023 sales were less than 6 billion compared to the estimate of $37 billion which is the potential total weight loss Market there is certainly quite a lot of room to grow in the future this is a list of the top drugs sold by novel Nordisk oamic and wovi are the two new drugs for diabetes and weight loss they are of the same chemical composition the pent expiration will be in 2031 and 2032 which is more than 7 years from now their 2023 sales were about $18 billion again compared to the estimate of $37 billion of potential total weight loss Market there's certainly quite a lot of room to grow this chart shows the quarterly EPS of Eli Lily we don't see a lot of recent growth that's because the weight loss drug zap bound got FDA approval only in November of 2023 we should be seeing their EPS growing quickly from now on as they increase the sales of Z bom the quality EPS of Nova nordis has been growing a lot since late 2022 that's because the weight loss drug wovi was approved by FDA in June of 2021 earlier than zap bound from Eli Lily let's look at the evaluation of Eli Lily first I looked at the PE ratios of the leading pharmaceutical companies Eli Lily's trailing PE is 128 Which is higher than most other companies numbers I then use a yearend 2023 stock price and net income as my base and use the Assumption of 40% annual EPS growth and PE ratios of 100 for 2023 80 for 2025 to calculate the stock prices for year end 20 24 and year end 2025 for 2024 I got $951 a share and for 2025 I got $1,065 a share for the valuation of Nova Nordisk I used the assumptions of 15% EPS growth per year and p ratio of 40 for 2024 I got a stock price of $164 a share and for 2025 $189 a share the professional analyst rate both LL and mvo as a buy or strong buy with high Target prices at around 1,40 for LLY and 170 for mvo with regard to insider trading there has been quite a bit of Insider selling for ly in the last 2 three months that means the stock price might flatten out in the near future but I'm still bullish about a company for the long term unfortunately I cannot find similar insider trading information for mvo maybe that's because MV is a company based in Denmark with only American depository receipt register in the New York Stock Exchange mvo is probably not required to file SEC form 4 which is about insider trading let's look at how LL and mvo performed when the broad Market was down I compared the two stocks against spy and triple Q for the following five periods the 2008 financial crisis the 2015 market crash the 2022 two fat rate hike which induced a market correction the recent 2023 Market correction and the pandemic crash for example during the 2022 Fed rate hike period spy went down 25% triple Q went down 33% LLY went up 19% and MV went down only 8% overall both LL and MV performed better than the broad market during Market downturns LL and MV will certainly perform much better than the broad Market in The Last 5 Years and in the last 12 months let's look at technical analysis this is a daily chart for LL for the last 6 months as you can see it has been going up steadily in the last 3 months it's approaching the upper Ballinger band now the RSI value is high but still lower than the historical Max the weekly chart for LL shows that it's right at the upper bowl in Japan and the RSI value is pretty high that means it might stop going up in the next few days or might even start to go down a little bit for mvo it went down for a few days recently and has been rebounding if it can get above and stay above the 20-day moving average that will be a pretty bullish sign the RSI value is not too high now the weekly chart for mvo shows that the stock is not under technical pressure to go down because it has not reached the upper bowl in Japan and the RSI value is also not very high so what are my conclusions the weight loss drugs by LL and mvo have significant growth potentials demand far exceeds supply for now and their patent expiration dates are more than 6 years from today L and mvo have grown faster than spy and triple Q in the 12- month and 5-year periods they are fairly recession resistant both stocks have favorable analysts ratings The Daily RSI values are high for L and moderate for mvo I will consider buying shares when daily RSI is less than 60 we should be mindful of the risk related to US Government putting pressure on LY and mvo to reduce price I have bought and sold MV since 2022 and have made significant profits I recently bought LLY shares I will post my trades in the community section of my YouTube channel I used to share my trades with my subscribers on Twitter starting about 3 months ago I've been posting my trades in the community section of my YouTube channel as you can see I tweeted that I bought MV on November 14 2022 I sold MV shares on May 4 April 4 and January 11th of 2023 at 39% 18% and 15% Gams a month ago on June 3rd I posted on YouTube that I bought LL y share and yesterday I posted that I sold my mvo shares at a very small loss and bought more L shares my ly shares bought in June are at 11.5% gain already again if you like what you see here please click the like subscribe and notification buttons so that you will be notified when I post new videos or post new messages on YouTube in the future as usual I welcome your comments questions and suggestions I'd like to remind you that I'm not a financial advisor I share my stock trading strategies and analyses for educational and entertainment purposes only if you want to buy or sell stocks you should make your own decisions and you should definitely consult with your financial advisors before you do so this wraps up my video for now I will chat with you again in the next few days in the meanwhile I'd like to wish you the very best of luck with your financial investments [Music]