Eli Lilly (NYSE: LLY) and Amgen (NASDAQ: AMGN) have both been in the spotlight recently due to their focus on the weight-loss treatment market. While both stocks are promising, Eli Lilly trades at a higher valuation multiple of 20.4x revenues compared to Amgen’s 5.9x. Additionally, Eli Lilly has shown better revenue growth and profitability, making it a more appealing pick according to analysts. In this article, we compare the two companies based on historical revenue growth, stock returns, and valuation to determine which stock is a better investment over the next three years.
Eli Lilly stock has significantly outperformed Amgen and the S&P 500 index over the past three years, with gains of 355% compared to Amgen’s 35% and the S&P 500’s 40%. This consistent performance has made Eli Lilly a standout stock in the health care sector, even during challenging market conditions. While both stocks are expected to see higher levels in the next three years, analysts believe that Eli Lilly will likely fare better due to its track record of strong returns.
When comparing revenue growth and prospects, Eli Lilly emerges as the stronger candidate. The company’s revenue has risen from $22.3 billion in 2019 to $34.1 billion in 2023, indicating strong growth potential. In contrast, Amgen’s revenue has increased from $23.4 billion to $28.2 billion over the same period. Eli Lilly’s market share gains for drugs like Mounjaro and Verzenio, as well as its expansive pipeline, suggest that the company is well-positioned for continued growth in the future.
In terms of profitability and debt position, Eli Lilly also comes out on top. The company’s operating income has increased by 55% over the last twelve months, while Amgen has seen a 28% decline. Additionally, Eli Lilly’s operating margin of 32.9% surpasses Amgen’s 23.6%. When it comes to financial risk, Eli Lilly has a significantly lower debt-to-equity ratio of 3.4% compared to Amgen’s 38.5%, indicating a stronger financial position.
While Amgen is available at a lower valuation and has a better cash cushion, analysts believe that Eli Lilly’s robust and diversified pipeline makes it a better pick for investors. However, Amgen’s MariTide obesity treatment and biosimilars for blockbuster cancer drugs could drive strong sales growth in the future. Despite its higher valuation, analysts believe that Eli Lilly’s future pipeline potential justifies its current price, and investors should not overlook its strong performance and growth prospects.
Overall, analysts suggest that Eli Lilly is a better investment choice over Amgen based on its superior revenue growth, profitability, and debt position. While both companies have promising prospects, Eli Lilly’s track record of strong returns and diversified pipeline make it a more attractive option for investors looking for long-term growth. Despite the high valuation multiple for Eli Lilly, analysts believe that the company’s future potential outweighs its current sales and earnings, making it a stock worth considering for investors looking to capitalize on the growing weight-loss treatment market.
