Eli Lilly Stock (LLY) Finds Support: $1T Market Cap Looms, Mounjaro Gains EMA Extended Use

Eli Lilly's stock (NYSE:LLY) could be seeing the $1,000 level emerging as a key area of support following recent positive news surrounding its diabetes drug, Mounjaro. The pharmaceutical giant has seen its stock rally in recent months, up 64% since early August, boosted by positive analyst sentiment and expanding market opportunities for its key products.

This morning's pre-market has started in bullish fashion, with LLY trading 1.2% higher at $1,039.88 following the European Medicines Agency's (EMA) committee recommendation to extend the use of Mounjaro (tirzepatide) for treating type 2 diabetes in children aged 10 and above.

The EMA's decision expands Mounjaro's application beyond adults to include younger patients with insufficiently controlled type 2 diabetes. Previously, treatment options for this demographic were primarily limited to metformin and insulin. The committee's endorsement now positions Mounjaro as a potential standalone treatment when metformin is inappropriate or as a combination therapy.

Clinical trials have demonstrated Mounjaro's effectiveness in managing blood sugar levels and promoting weight loss in young patients.

Analysts have reacted favorably to Eli Lilly's prospects, further solidifying the bullish sentiment surrounding the stock. Bernstein maintained an “Outperform” rating, raising the price target to $1,100, citing Eli Lilly's consistent market share gains and robust revenue growth.

Morgan Stanley increased its price target to $1,290, reflecting optimism about the expanding GLP-1 market and Eli Lilly's prominent position within it. BMO Capital also raised its price target to $1,100, highlighting the company's growing dominance in the obesity treatment market. These endorsements have bolstered investor confidence, contributing to the stock's rise and the establishment of $1,000 as a new support level.

The EMA's recommendation to extend Mounjaro's use to younger patients not only broadens the drug's market but also positions Eli Lilly favorably against competitors like Novo Nordisk, whose GLP-1 drug Victoza is already approved for children 10 years and older. This development enhances Eli Lilly's growth prospects in the diabetes and obesity treatment sectors. 

The positive momentum surrounding Mounjaro, coupled with bullish analysts, suggests that Eli Lilly's stock price has indeed found support at the $1,000 level, at least for the short term. The expanding market reach and potential for further growth in the diabetes and obesity treatment sectors has marked the stock out as one of the leading performers in the final period of the year and once again threatening the $1trillion market cap level at $971.39 billion.