Should You Invest in Eli Lilly?

PHOTO CREDIT: Eli Lilly

OVERVIEW

Eli Lilly and Company is a pharmaceutical company based in the United States. They make several well-known drugs like Trulicity, Humalog (insulin for diabetes), and many others for a wide range if viruses and diseases. The company was founded in 1876 and manufactures and sells its drugs around the world.

Why You Should?

  1. Eli Lilly has partnered with other pharmaceutical companies to design and research ways to prevent the COVID-19 Virus. They have been researching cures like antibodies and many others. If Eli Lilly can capitalize on the sky-high demand for drugs related to COVID-19, then expect the stock price to surge on this news.
  2. Eli Lilly tends to have a stable performance during a recession as the products and services that it offers are essential for people to survive. A good example of this is its insulin business, as this will see stable demand as volumes will remain the same as people need this drug to survive.
  3. Eli Lilly is part of an industry that continues to see rapid growth. It uses its money-making drugs to research and develop new drugs to combat cancer, COVID-19, and many others. They acquire companies and partner with others in order to achieve their goals. This will help the company go into the future of the pharmaceutical industry.
  4. Eli Lilly has seen rising revenues and profits over the past couple of financial years due to the factors mentioned above. This will help the company build a stronger balance sheet which will help them grow. This will benefit the company in the future. In the financial year of 2019, the company reported revenues of around 22.3 billion and profits of around 8.3 billion. Both of these metrics are higher than what the company reported in the financial year of 2018 when they had revenues of around 21.5 billion and profits of around 3.23 billion.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. Eli Lilly faces tough competition from other large pharmaceutical companies who are coming up with competing drugs. Some of the companies include Regeneron, Abbvie, Abbott Labs, and many others. This competition might hurt the company in the future.
  2. Eli Lilly faces a negative political background as both parties in Congress want to put price limits on drugs made by Eli Lilly and other pharmaceutical companies. This will negatively impact the top and bottom line of the company and will also hurt their future growth. Investors should be cautious about future political developments.
  3. The COVID-19 Pandemic has also negatively impacted the company as future drug development has been delayed as they focus on the development of a COVID-19 cure or vaccine. People are also not visiting their doctors as they usually would, which will negatively impact some of the company’s drug volumes. This will negatively impact the company in the short-term.

MY OPINION

In my opinion, I think that Eli Lilly is a good long-term investment due to the hopes of a COVID-19 vaccine/cure, a recession-proof investment, strong future growth, and rising revenues and profits. However, a negative political background, competition, and the COVID-19 Pandemic will negatively impact the company in the future.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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