Berkshire Hathaway recently crossed the $1 trillion market cap, becoming the first non-tech stock to do so. While the stock has given back some gains in recent days and fallen below that threshold, it's still an incredible accomplishment nonetheless.
But there's another non-tech stock which could be worth $1 trillion in the near future, and that's Eli Lilly (NYSE: LLY). The healthcare giant has a market cap of more than $800 billion and is currently the next most-valuable stock after Berkshire. Here's why it wouldn't be a surprise for it to reach the $1 trillion mark as early as next year.
Why Eli Lilly stock could remain a hot buy in 2025
This year, shares of Eli Lilly are up around 60%, and over a five-year stretch the stock has achieved gains of more than 730%. There's little secret to the stock's success as the company has an incredibly popular and successful drug in tirzepatide. It is the active ingredient in its diabetes product (Mounjaro), and it has recently been approved for weight loss as well and is branded as Zepbound for that indication.
Analysts have struggled with determining just how much revenue tirzepatide could generate for Eli Lilly, but it's fair to say that it will be massive. Peak sales projections of $50 billion may be modest, especially if tirzepatide accumulates more indications (such as for sleep apnea and heart failure), which could send its sales potential to new heights.
New indications for tirzepatide along with Eli Lilly investing more into the continued rollout of Mounjaro and Zepbound (of which there are shortages) could be catalysts for the stock to rise higher in the months ahead. And it's not as if Eli Lilly needs to double for it to hit a $1 trillion market cap; its shares would need to rise by a relatively modest 20% for it to reach that milestone.
Eli Lilly's growth rate has been accelerating
One way for Eli Lilly to grab the attention of growth investors is to deliver stronger sales numbers, which it has. In its most recent quarterly results, which ended on June 30, the company reported sales of $11.3 billion, which rose by 36% when compared to the prior-year period. And on a year-to-date basis, sales are up by 31%. The healthcare company has been achieving much stronger growth numbers than it has in the past.
LLY Revenue (Quarterly YoY Growth) data by YCharts.
Between the continued rollout of Zepbound and Mounjaro, and regulators recently approving its early Alzheimer's treatment, Kisunla, it's not hard to see why this growth rate could accelerate in future quarters.
Should you buy Eli Lilly stock?
One reason investors may be hesitant to buy shares of Eli Lilly is due to its relatively high valuation -- it's trading at more than 110 times its trailing earnings. But that's reflective of the premium investors are willing to pay for the stock given its mammoth growth prospects. The stock trades at a price-to-earnings-growth (PEG) multiple of less than one, which indicates there is good value here for investors who are willing to buy and hold the stock for the long haul.
While Eli Lilly's stock may not have as strong of a year in 2025 if the economy falls into a recession, given its strong growth prospects, it would be surprising if it wouldn't be able to still deliver impressive enough results to send its valuation to $1 trillion. Either way, this can be a fantastic stock for long-term investors to hold in their portfolios for years.
Should you invest $1,000 in Eli Lilly right now?
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
