Additionally, the U.S. Food and Drug Administration has recently approved Kisunla (donanemab-azbt) injection for the treatment of Alzheimer's disease. Jefferies analysts estimate that donanemab could generate close to $5B in annual sales at its peak.
Positive Catalysts
We are optimistic that sales estimates for tirzepatide sales can continue to move higher. A key area of focus for investors has not been the demand, but Lilly's manufacturing capabilities to meet underlying demands. At the end of 2022, Lilly announced plans to expand autoinjector capacity through two new facilities at Research Triangle Park and Concord, North Carolina. RTP facility has been operating since mid 2023, and have doubled capacity versus 2022. The Concord facility is expected to be operating at the end of this year and begin shipping products in 2025. Additionally, Lilly recently announced plans to for a new facility in Germany in 2027, expected to be of similar footprint to Concord/ RTP. We think manufacturing capacity outlook is skewed to the upside.
On top of expanding manufacturing capacities for injection-type tirzepatide, we see room for sales estimates to be revised higher due to the opportunity for Orforglipron, an oral form of GLP-1. Phase 2 results have been very promising and a lot of Phase 3 results are due in mid 2025.
Price Target: $1000
We performed a DCF analysis for LLY, using analysts' estimates from FactSet to 2028, discount rate of 7.02% (WACC), assuming 5% terminal growth. This yielded a fair stock price of $942.
On a valuation multiple basis, looking out to 2025, we see analysts estimating $22.72 EPS. This represents a 66% growth from 2024's estimates of $13.37. Looking out to 2026, we see a 31% growth from 2025. If we average 2024-2025 and 2025-2026 EPS growth rates, we argue for a 48 multiple. Applying a 48x multiple to 2025's estimated EPS of $22.72 yields a target price of $1097/share.
