3 Weight-Loss Stocks to Buy Now

Since the release of Ozempic and its weight-loss counterpart for labeled use, Wegovy, the stock market has enthusiastically been buying companies involved in producing GLP-1 anti-obesity medications.

Likewise, consumers have taken a keen interest in these drugs. At the moment, the market demand for these drugs is so high that even large pharmaceutical companies can’t supply enough to meet it.

This emerging market is expected to grow dramatically in the coming years as more and more people seek pharmaceutical interventions for weight problems.

By 2030, the market for weight loss drugs worldwide could be well over $100 billion. The companies that end up leading the pack, therefore, could be very strong long-term compounding machines for investors.

Three weight-loss stocks to buy now are Novo Nordisk, Eli Lilly, and BioAge Labs. But which one ranks highest?

Novo Nordisk

As the creator of Ozempic, Novo Nordisk (NYSE:NVO) enjoyed a first-mover advantage in the market for weight loss drugs.

With Ozempic and Wegovy now well-known among consumers, Novo Nordisk has reaped the benefits of the drugs’ popularity.

Revenue for 2022 was a respectable $25.06 billion, but that pales in comparison to the trailing 12-month total of $37.44 billion today. Net incomes have risen just as dramatically from $7.86 billion in 2022 to $13.05 billion over the last 12 months.

Unsurprisingly, Novo Nordisk trades at quite a premium as the main player in a market with enormous growth potential. The stock is currently priced at about 39.3x earnings and 39.0x cash flow, both ratios that imply high levels of future growth. At 1.5x expected earnings growth, however, it appears that Novo Nordisk may be a more or less fair value at today’s prices.

Analysts foresee Novo Nordisk shares reaching a median price target of $155 per share, a gain of nearly 30% from the last close of $120.04. This expectation reflects the company’s strong potential for continued growth.

Over the coming five years, analysts expect to see Novo Nordisk’s earnings per share continue to advance at a compounded rate of over 18% annually.

A final point for investors to like about Novo Nordisk is the fact that the company is actively repurchasing shares. The company recently enhanced its share repurchase program, allocating additional capital to buy back shares through November.

The number of outstanding shares has been steadily declining for many years, and Novo Nordisk’s management appears to be willing to keep concentrating the ownership positions of its shareholders through buybacks.

Eli Lilly

Though Novo Nordisk was the first company to bring an effective anti-obesity drug to market, Eli Lilly quickly moved to one-up its competitor.

The company’s own GLP-1 drug, Zepbound, has been found to produce decreases of about 21% of body weight over a 72-week period at the highest dosage. Wegovy, by contrast, caused patients in the same study to lose about 15% of their body weight on a slightly shorter timeline.

This stark difference may create a preference for Zepbound among consumers and medical professionals, especially as the drug becomes more widely available.

As with Novo Nordisk, the introduction of GLP-1 drugs by Eli Lilly has resulted in substantial gains in terms of both revenue and net income.

In 2022, the company generated full-year revenues of $28.54 billion. For the trailing 12-month period ending in Q2, that number skyrocketed to $38.92 billion. Net incomes for the same periods were $6.25 billion and $7.34 billion, respectively.

While Eli Lilly has seen great success with Zepbound and will likely continue to improve its performance going forward, it’s worth noting that the stock looks even more expensive than Novo Nordisk at the moment.

Shares of LLY command a price-to-earnings ratio of 56.2 and a price-to-sales ratio of 22.2. Perhaps most worrisome are the price-to-earnings-growth and price-to-cash-flow ratios of 2.8 and 119.4, respectively. These metrics could well suggest overvaluation, so value investors may want to be somewhat cautious when looking at Eli Lilly.

With that said, analysts don’t see a price correction coming for LLY anytime in the near future. The stock’s 12-month median price forecast of $1,031.50 would see shares appreciate by another 10.7% from their current price of $932.06. Furthermore, over three-quarters of the analysts covering Eli Lilly rate it as a buy.

BioAge Labs

While both Novo Nordisk and Eli Lilly are betting on GLP-1 drugs alone, BioAge Labs (NASDAQ:BIOA) is taking a slightly different approach.

The company’s signature drug, Azelaprag, mimics peptide activity typically associated with exercise to enhance weight loss, especially when used in conjunction with a drug like Ozempic or Zepbound.

A trial with Zepbound found that the combination of Eli Lilly’s drug and Azelaprag produced even better weight loss results than Zepbound alone. Azelaprag has also been shown to prevent muscle atrophy and may be an effective drug for supporting healthy body composition in older patients.

BioAge is extremely new to the stock market, having just conducted its IPO in late September. In a telling sign of investor enthusiasm for weight-loss drugs, shares of BIOA opened at about $22.50 despite an IPO price of $18.50. 

With BioAge being such a young company, it’s difficult to say how it will perform over time. What is clear, though, is that BioAge has the potential to occupy a unique spot within the rapidly growing weight-loss drug market.

While other startup companies attempt to compete with the GLP-1 drugs manufactured by the likes of Novo Nordisk and Eli Lilly, BioAge’s weight-loss product can work in tandem with them. As such, BioAge may find itself less exposed to the fierce competition of the industry at the moment.

BioAge Labs is also researching anti-aging interventions, another potentially lucrative market. One of BioAge’s other main drug candidates is an NLRP3 inhibitor that can help alleviate chronic inflammation, a contributor to many age-related diseases. For the moment, however, BioAge’s value will almost certainly be determined mainly by the success of its weight-loss offerings.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.