Consider This Top Biotech Stock Instead of Eli Lilly
FREE ARTICLE: Top 10 Stocks to Buy**
Forget Eli Lilly, Buy This Outstanding Biotech Stock Instead**
By Keith Speights – Jun 21, 2024, at 5:51 AM
**KEY POINTS
- This exceptional biotech firm is smaller but highly successful compared to Eli Lilly.
- It has significant growth potential across various markets.
- Most importantly, this biotech stock is more attractively valued than Eli Lilly.
**Top 10 Stocks We Prefer Over Vertex Pharmaceuticals**
Eli Lilly is a strong choice... but this biotech stock is even better.
Eli Lilly (LLY -0.24%) has been performing exceptionally well, with soaring sales, profits, and a share price increase of over 50% this year after a 59% rise in 2023. Now the world's largest healthcare company, Lilly has substantial growth prospects with its obesity drug Zepbound and anticipated U.S. approval for its Alzheimer's drug donanemab.
However, is Eli Lilly the best biopharma stock to invest in right now? I believe there's a more compelling option available.
**Not Exactly David vs. Goliath**
The stock to consider is Vertex Pharmaceuticals (VRTX -0.57%). This isn’t a classic David vs. Goliath scenario; while Vertex is smaller than Lilly, it is still a major player with a market cap exceeding $120 billion, compared to Lilly’s over $840 billion.
Vertex's stock performance has been impressive, outpacing the S&P 500 in 2024 after a nearly 41% rise last year.
**Vertex’s Unique Position in the Market**
Vertex dominates the treatment market for cystic fibrosis (CF), with all four approved therapies, including the highly successful Trikafta/Kaftrio. This monopoly contributes significantly to its revenue stream.
**Massive Growth Opportunities**
While Eli Lilly has promising growth opportunities in obesity, type 2 diabetes, and Alzheimer's, Vertex also has significant potential. The company is awaiting approvals in the U.S. and EU for its vanzacaftor triple-drug combo targeting CF, which could become its most profitable CF therapy.
Vertex's launch of Casgevy, a one-time functional cure for sickle cell disease and transfusion-dependent beta-thalassemia, is expected to be a blockbuster drug.
Additionally, Vertex is advancing suzetrigine (VX-548) for moderate-to-severe acute pain, a non-opioid with enormous potential in the multibillion-dollar acute pain market.
Vertex is also in late-stage trials for inaxaplin, targeting APOL1-mediated kidney disease (AMKD), which affects more patients worldwide than CF and currently has no approved treatments.
Furthermore, the acquisition of Alpine Immune Sciences will add povetacicept to Vertex’s portfolio, targeting IgA nephropathy, another condition with no approved therapies.
Vertex’s pipeline includes promising early-stage programs, notably its type 1 diabetes program, where it aims to develop a cure with its islet-cell therapies.
**Vertex’s Competitive Edge Over Lilly**
When comparing the product lines and pipeline candidates of Vertex and Eli Lilly, Lilly may seem to have the upper hand. However, Vertex shines in terms of valuation.
Eli Lilly’s shares trade at over 64 times forward earnings, with a price-to-earnings-to-growth (PEG) ratio of 2.6. In contrast, Vertex’s forward earnings multiple is a much more reasonable 29.6, with a PEG ratio of just 0.64.
Both companies have strong growth potential, but Eli Lilly’s expected growth is already reflected in its share price, whereas Vertex offers more room for growth at a more attractive valuation. Therefore, Vertex Pharmaceuticals stands out as the better investment choice.
**Is Now the Time to Invest in Vertex Pharmaceuticals?**
Before investing in Vertex Pharmaceuticals, consider this:
The Motley Fool Stock Advisor analyst team recently identified what they believe to be the 10 best stocks for investors right now, and Vertex Pharmaceuticals wasn’t among them. These top 10 stocks have the potential for significant returns in the coming years.
For instance, Nvidia made the list on April 15, 2005; a $1,000 investment at that time would be worth $775,568 today.
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