Why Eli Lilly is a top GLP-1 stock: Roundhill CEO

[Music] it's a big noise Universe of stocks out there welcome to goodbye or goodbye our goal here to help cut through that noise to navigate the best moves for your portfolio and today we're looking at the glp1 weight loss drug landscape Eli Lily heating up the competition with slashing Zep bound prices for self-pay patience so what's the best way to play it now I'm here with roundhill Investments chief executive officer Dave Masa Dave good to see you as always thanks for having me all right so let's start with your first buy here and it is Eli Lily your timing is perfect Dave they were making news today let's run through these bullets of why you say this one is still a buy the first one Head Start in the glp1 weight loss drug space yeah so glp1 weight loss drugs weren't on anyone's radar until recently and same as general of AI and AI Lily is the Nvidia of the glp1 and weight loss space isn't it amazing used to say things with the Uber of something now you say the inv exactly so it's it's become a term on and of itself but there's a reason for that they've been working on these drugs for decades uh Novo Norse has as well but because of that and because there's such a shortage of them and there's insatiable demand because of the Obesity problem they their leadership their head start they have drugs in Market is why they're seeing such strong earnings growth for these drugs and for their really entire platform okay so first bullet point is the Head Start let's go to that optimistic sales Outlook yeah so they just released earnings and you saw some of these numbers and we're seeing uh various drugs with goie Zep bone grow at over 100% 200% in some cases and at the same time the company is actually increasing their forecast right so not just beating and raising but blowing away the numbers and also even today they've come out and said as as you've pointed in the intro that they're now going to offer on their direct to Consumer website a a version that's basically half off um now the difference there is that's an an in able in a traditional way versus these pens but still if you've been waiting around or if you don't have insurance to pay for it this is a great way to get those drugs that you were looking for so you like that move strategically and financially for them well over time these uh these prices are going to come down we all hear about these $1,000 prices right outside of the US people don't pay those prices uh and if you but if you don't have insurance um this is a way to make it much more attractive so I think what they're trying to do is basically make their total addressable Market come to them quicker final Point here final bullish Point Dave its place as leadership stock you see it intact right now yeah exactly so if you look at the if you look at the technicals of this stock um certainly had a really strong robust uh runup fell in that July and August period where a lot of the and kind of got thrown into that AI selloff because it was such a momentum leader but it it it actually has maintained its attractive technical profile and that to me is even though this is a nearly trillion dollar company um like some of the other uh AI Mega cap Tech leaders it still has that uh bullish case in and uh before folks now Pile in you laid out the bullish case but what are the downside risks in your op opinion viewers need to think about before they commit Capital here look anytime a company that's up over 70% year to date uh an even stronger remarkable run right right exactly so you got you got to be careful right so I think it is worth kind of checking yourself before you just Dive Right In right and so one of them would be do these sales growths actually forecast end up disappointing we don't believe that to be the case to date they've been delivering um but certainly some negative news or negative headlines could come out and change that because anytime you see a stock trade really at such high multiples it doesn't take a lot for it to have a sell off do you think Dave after that kind of run valuation how do you think about that Dynamic well it's interesting they keep growing into their valuation because they keep growing their Top Line and so certainly if you were to just screen it on a a a price to earnings multiple compared to other healthc care stocks it would look very expensive but those Healthcare stocks are not growing anywhere near the pace at lilas all right so you like Eli Lily let's turn what you're not such a fan of here we're a little bit more skeptical that'll be him and hers let's run through those bullets too Dave so the first reason deterior deterioration on absolute and relative basis so I I the last bullet point on Lily was its technical case was was remaining favorable in this case h if you had that chart up a moment ago huge run up up 150% in four months but now it's been slowly deteriorating um I think this is a name that kind of got caught up into a little bit of a retail craze uh because it was you know it's kind of an exciting name right it's digital Healthcare and things of that nature but um basically since then it's all the stocks done is really sell off and today really uh is is a prime example of that let's go bullet point number two another reason you'd stand on the sidelines with his concerns with its glp1 offerings yeah so first and foremost what they're selling is not technically glp1 drugs they're what's called compounding drugs they're made through compounding pharmacies so a company goes up and and makes treatments in Therapeutics that look and feel a lot like the actual medicines uh and many people um say they're safe uh they are doing so in FDA approved facilities but they're not FDA approved drugs um and there's been some short sellers who've been some pretty good research on this basically saying that actually the place that's making them has a little bit of a shady past um so that would give me uh that gives me some concern uh about their entry into the space and a final final reason for skepticism in your opinion Dave potential Supply boost to gp1 drugs look so him and hers got into the space because there's so much demand um that Lily and Novo and others can't meet the Supply right and that's one reason why people um the stock has gone up so much him's got into the space and said we're going to do this on the cheap significantly less expensive but guess what the supply chain is quickly uh improving Lily and Novo particularly Lily is investing in in factories in North Carolina their home state of Indiana and those are going to come come online sooner than later and basically making it so that someone doesn't need a copycat drug to get the actual real drug that they want final Point here on this one as well let's talk about maybe some of the upside risks viewers have to consider look they reported earnings earlier in August and their Core Business actually was okay their Core Business is subscription services and that was growing and it beat expectations still pretty small um so again if they can kind of grow out of this and find their way forward as a a pharmaceutical company then that would be a risk uh we don't necessarily see that coming to FR um but that is you know the RIS to the upside it is a we've had Bulls on this stock come on and just in Broad Strokes I think strategically what they kind of pound the table on is they say listen it's great value for customers that's a bull you know you hear them make that you don't have to physically go to the doctor's office you don't have to go to the pharmacy to pick up the prescriptions what do you say to that no 100% this is actually I think a loved and hated stock if you go on social media there's a huge following of folks uh who believe in in the space because because of those points I think ultimately look at Eli Lily today they come out and fiser actually has done the same thing they're going to have a direct consumer platform so just like um many spaces have seen Financial Services is a good one you see these upstarts and uh digital wealth platforms well the big boys figure it out pretty quickly and we're starting to see that with Lily all right Dave so bottom line you like Eli Eli Lily you'd steer clear of him and hers here that's correct and thank you Dave so much for your time in those picks I appreciate it and thank you for watching goodbye or goodbye we're going to be bringing you new episodes at 3:30 p.m. Eastern