Wall Street is Downgrading Fitness Stocks Such as Peloton and Mooning Over GLP-1 Drug Makers Such as Eli Lilly and Company (LLY)

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The stock market is currently undergoing a thematic shift, one that favors weight loss drug manufacturers such as Eli Lilly and Company (LLY) over fitness-related names such as Peloton (PTON). Akin to a stone rolling down a hill, gathering momentum with each turn, such shifts represent generational wealth-making opportunities on the back of accelerating trends, as was witnessed when Netflix ushered in the age of content streaming or when Tesla popularized EVs as a crucial ingredient in combatting climate change.

Eli Lilly and Company (LLY) Vs. Peloton (PTON)

Eli Lilly and Company’s Mounjaro injections treat type-2 diabetes as well as obesity by targeting two hormones – Glucagon-Like Peptide-1 (GLP-1) and Glucose-dependent Insulinotropic Polypeptide (GIP) – to achieve superior blood sugar control. When used in conjunction with insulin, clinical trials showed an average weight loss of 23 pounds.

The drug company’s latest weight loss offering, Retatutide, is currently undergoing clinical trials and supposedly offers superior results by targeting three different hunger-regulating hormones: GLP-1, GIP, and Glucagon. As per the results of Retatutide’s phase two trials, the drug can lead to an average loss of 24.2 percent of body weight in adult patients after 48 weeks of the treatment, when injections are administered once every week.

Peloton (PTON), on the other hand, is an internet-connected exercise equipment and media company that sells exercise bikes and treadmills along with a subscription for its online workout programs. Peloton’s bikes and treadmills can cost around $2,500 per unit, and the monthly subscription fee for its curated content currently costs around $55.

Peloton shares reached their zenith during the pandemic-induced lockdowns as millions of customers turned to the company’s offerings to maintain fitness. As the pandemic receded and people started craving communal interactions within gyms and parks, the demand for Peloton’s products started waning. As an illustration, the fitness company earned $4.13 billion in revenue in 2021 vs. just around $3.05 billion in 2022. In its just concluded FY 2023, the company earned around $2.8 billion in revenue.

For comparison, Eli Lilly and Company’s total revenue is growing by a double-digit percentage, thanks to the burgeoning demand for GLP-1 drugs. During 2022, the company’s Mounjaro-related sales amounted to just $203 million. So far this year, Eli Lilly and Company has earned a whopping $2.96 billion in Mounjaro-related revenue!

Wall Street’s Love Fest With GLP-1 Drugs

Immediate gratification sells like hotcakes in America. While there are genuine health-related reasons that necessitate the existence of GLP-1 drugs, Wall Street is also factoring in the oncoming demand from people who might view them as “lifestyle drugs.”

JP Morgan recently estimated that the annual sales of GLP-1 drugs in the US would reach around $100 billion by 2030, with Eli Lilly and Company and Novo Nordisk holding around 80 percent of the market share by the end of this decade. Around 7 percent of the total population in the US is expected to be using these drugs in the next 10 years, with the per capita caloric consumption of such users falling by around 20 percent.


It is hardly a surprise, therefore, that Eli Lilly and Company is the next “hot thing” among analysts at the moment, with nary a thought given to Peloton as it undergoes its earnings recession. As is evident from the above gallery, Eli Lilly and Company currently commands 18 ‘buy’ ratings and 1 ‘hold’ recommendation. On the other hand, Peloton shares can boast of only 6 ‘buy’ recommendations, 16 ‘hold’ ratings, and 3 ‘sell’ ratings.

As a testament to Wall Street’s bearish view on Peloton, just today, Deutsche Bank reduced its target for the stock from $13 to $4.

Eli Lilly and Company shares are up over 64 percent so far this year on expectations of this oncoming thematic shift. In light of this bristling rally and comparatively stretched valuation, however, some analysts have begun to withdraw the proverbial chips from the table. For instance, Morgan Stanley’s wealth management unit has apparently reduced the weight of the drug company in its internally managed portfolio.

Do you think Wall Street is justified in banking on a thematic shift toward GLP-1 drugs and away from fitness-related companies? Let us know your thoughts in the comments section below.

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