1 Reason to Buy Eli Lilly Stock Hand Over Fist Right Now

Pharmaceutical powerhouse Eli Lilly (NYSE: LLY) is having a terrific 2024. Shares have gained 58% so far this year, handily outperforming both the S&P 500 and Nasdaq Composite indexes.

Much of the share price appreciation can be attributed to Lilly's success in the diabetes and obesity care markets thanks to its blockbuster glucagon-like peptide-1 (GLP-1) agonists, Mounjaro and Zepbound. Moreover, Lilly made headlines back in July as the company's Alzheimer's drug, donanemab, received approval from the Food and Drug Administration (FDA).

About a month ago, Lilly secured another big win that I think is being overshadowed by the company's success in other areas of the healthcare realm. Below, I'm going to break down Lilly's latest milestone and explain why I see now as a great opportunity to scoop up shares.

Back in September, Lilly received FDA approval for its atopic dermatitis medication Ebglyss. Atopic dermatitis is more commonly referred to as eczema.

Eczema is generally treated with topical medications such as creams, ointments, or gels. For some patients, topical solutions are suboptimal as symptoms such as dry skin and itchiness continue lingering.

Ebglyss differs from topical ointments because it is an injectable. The medication is specifically marketed for patients with moderate-to-severe eczema who are not able to fully treat their symptoms with topical prescriptions.

According to Lilly's announcement regarding Ebglyss, there are 16.5 million adults with eczema just in the U.S. Moreover, roughly 40% of this cohort experiences "moderate-to-severe symptoms like itchiness, dry and scaly skin, discoloration and rashes, which can lead to more scratching that may cause skin to crack and bleed".

To put some numbers on the eczema treatment opportunity, Precedence Research estimates that the global total addressable market (TAM) will reach $31.4 billion by 2034 -- up from $14.7 billion today. Additionally, Precedence's report suggests that North America is the largest market for eczema and could reach $8.1 billion by the middle of next decade.

The chart below illustrates the price-to-earnings (P/E) ratio for Eli Lilly over the last six months.

Right off the bat, I'll admit that a P/E multiple of 113 is not cheap.

However, there are some trends from the chart above that I think are worth calling out and studying a bit further. Notice that Lilly's P/E ratio began to fall between July and August.