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Two industry leaders currently stand out as formidable investments: Eli Lilly and Netflix. Both companies have demonstrated strong stock performance this year, with significant growth potential ahead.
1. Eli Lilly
Eli Lilly has emerged as a key player in the pharmaceutical industry, largely due to its innovative medication, tirzepatide. This drug, approved in 2022, is designed to manage diabetes and obesity and is also being tested for other therapeutic uses. Analysts suggest that tirzepatide could potentially generate peak sales of around $25 billion, a remarkable figure in an industry where many new drugs struggle to exceed $1 billion in sales.
Investors have shown increasing confidence in Eli Lilly, especially as tirzepatide begins to play a crucial role in the company’s growth trajectory. The drug’s potential further extends to preventing type 2 diabetes in at-risk populations, a development that could lead to a significant surge in stock prices.
The company’s financial outlook appears solid, with projections indicating an average earnings per share (EPS) growth of 73% annually over the next five years, a notable achievement for a company of its size.
Eli Lilly is also progressing with innovative treatments, such as a gene therapy for hearing loss, which recently showed promising results in early trial phases. Additionally, the company is investigating other potential blockbuster drugs for weight loss and addressing Alzheimer’s disease, further solidifying its position in the market.
Given its consistent growth and innovative pipeline, Eli Lilly remains a compelling investment even in light of its significant achievements over recent years.
2. Netflix
Netflix faced substantial challenges in recent years, with concerns about stagnating subscriber growth and increased competition. However, the company has successfully adapted its strategy, introducing an affordable ad-supported subscription tier and addressing password sharing through sub-account fees.
The effectiveness of these strategies is reflected in Netflix’s latest financial results. The company reported a 15% year-over-year revenue increase to $9.8 billion in the third quarter. Its EPS rose by 44.8% to $5.40, and free cash flow increased to $2.2 billion, marking a 16.2% boost from the previous year. Moreover, Netflix expanded its paid memberships by 14.4%, reaching 282.7 million users.
This expanding user base is crucial for Netflix, as it allows the company to refine its content creation strategy based on viewer preferences. The diversity of content provided by Netflix enables it to thrive amidst competition, as its offerings continue to attract new subscribers.
The entire streaming sector continues to grow, capturing less than half of television viewing time in the U.S. A gradual transition from traditional cable to streaming services is expected, which bodes well for Netflix’s future. The platform’s brand strength in streaming positions it for ongoing success, making its stock a worthy consideration for investors.
In conclusion, while both Eli Lilly and Netflix have already enjoyed substantial gains this year, their future trajectories suggest that they can continue to deliver impressive returns for investors.
Source
www.fool.com