Stock Market

The three top performing stocks discussed below have appreciated in value by an average of 129.7% in 2024. Such torrid growth logically raises the question of what is possible moving forward. While a conservative investor might suggest that such growth is unsustainable, each of those firms is strongly positioned in the weight-loss pharmaceutical category.

Sales of weight loss drugs, led by GLP-1 agonists, are expected to grow at a compound annual rate above 19% between 2023 and 2029. The drugs reduce appetite while slowing emptying of the stomach. The result is astounding weight loss for users. That alone will  fuel increasing demand.  By the way, demand metrics are pretty incredible. Some estimates contend that 9% of the U.S. population may be on the drugs by 2030

Viking Therapeutics (VKTX)

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Viking Therapeutics (NASDAQ:VKTX) is the most exciting pharma stock among the top performers this year. The company has emerged as one of the primary challengers in the development of weight-loss therapeutics. Share prices have more than quadrupled throughout 2024 with more gas left in the tank

The company recently shared updates on its lead candidate drugs, VK2809 and VK2735. Each drug has continued to show incredible promise in producing weight loss. 

However, it’s VK2809 that investors should pay particular attention to. The drug is currently in Phase 2B clinical trials for the treatment of non-alcoholic steatohepatitis (NASH). That is essentially a form of fatty liver disease for which it is showing promising efficacy. There are a few important things to note on that front. First of all, if the company can successfully prove that it is safe and effective for that purpose it opens its potential utility as a weight-loss drug. Many insurers are hesitant to pay for weight-loss drugs. Those drugs will face a much easier approval process if they have a secondary purpose.

Moreover, VK2809 is a pill. None of the leading weight-loss drugs is currently available in pill form. The first commercialized weight-loss pill is almost certain to be a blockbuster. Viking Therapeutics is in the running. It’s hard to bet against the stock at this point. 

Eli Lilly (LLY)

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Eli Lilly (NYSE:LLY) is a stock that will continue to confound investors throughout 2024. Those investors are well aware of the continued potential in the stock following its strong Q1 earnings report at the end of April.

Revenue growth reached 26% during that period. As encouraging as those results appear, those sales came up short of expectations. One way to assess Eli Lilly’s current potential is to simply look at its price relative to forecast prices. Current share prices are above consensus at the moment suggesting it’s entirely logical to be cautious.

At the same time, Eli Lilly will continue to face challengers like Viking Therapeutics which promise to capture market share moving forward. My best guess is that Eli Lilly is going to trade sideways for the time being. The weight-loss drug market will continue growing rapidly in the coming years but Eli Lilly’s gains over the last year won’t continue for the next 12 months. it’s a great story but not one worth investing in at this point. 

Novo Nordisk (NVO)

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Novo Nordisk (NYSE:NVO) stock is facing the same issues as Eli Lilly but continues to trade slightly below consensus prices. That said, I don’t think investors should assume Novo Nordisk will fare any better than Eli Lilly for the remainder of 2024.

Like Eli Lilly, Novo Nordisk missed sales estimates during the most recent period. Wall Street was expecting the company to produce $1.52 billion in sales of Wegovy, but the company produced only $1.35 billion. 

List prices for the drug continue to fall as competition rises. Those factors are not expected to change for the remainder of 2024. Thus, it’s reasonable to anticipate the drugmaker will continue trading sideways during the year.

Novo Nordisk’s challengers include not only small firms such as Viking Therapeutics but also large multinational pharmaceutical companies including Amgen (NASDAQ:AMGN). Its weight loss drug may produce longer-lasting weight loss than currently available therapeutics. The overall thrust here is that most of the returns for Novo Nordisk have already been had.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

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