Any drug that can make you skinny and rich at the same time must be a miracle. Ozempic and its competitor treatments are already handling the skinny side of the equation, and they're working towards the rich side.
Read on to find out more about Ozempic and its incredible popularity. You'll also meet six stocks and one exchange-traded fund that should benefit from the Ozempic craze. Included at the end of this article are the tips you need to position your Ozempic-related portfolio for success.
What Is The Ozempic Craze?
Ozempic is a once-weekly, injectable diabetes drug that effectively suppresses appetite.
Over the past two years, doctors have increasingly prescribed Ozempic to non-diabetic patients for weight loss. The treatment has gained traction among celebrities and social media influencers, who are spreading the word to the masses.
Now Ozempic has a celebrity status of its own. Branded terms, including "Ozempic face" and "Ozempic butt," have found their way into mainstream conversation. Both refer to bodily changes associated with rapid weight loss—namely, sagging skin. That isn't deterring demand, though. The drug is so popular that it's hard to get, which has only fueled its fame.
The Ozempic frenzy has driven an expected 32% to 38% sales increase in 2023 for its maker Novo Nordisk A/S (NVO).
About Ozempic
Ozempic is a brand name for semaglutide. In medical terms, semaglutide is a glucagon-like peptide-1 (GLP-1) receptor agonist. Other branded drugs in this category include Wegovy, Saxenda, Mounjaro and Zepbound.
Wegovy and Saxenda are also Novo Nordisk A/S products. Both are approved for weight loss. Mounjaro and Zepbound are produced and sold by pharma competitor Eli Lilly
6 Stocks And 1 ETF That Benefit From Ozempic's Popularity
The table below introduces six stocks and one ETF that stand to benefit from Ozempic's popularity. The table is followed by a closer look at each of these securities.
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download one of Forbes' most popular and widely anticipated reports, 12 Best Stocks To Buy for 2024.
1. Novo Nordisk A/S (NVO)
- EPS (last 12 months): $17.66
- Stock price: $106.26
- Analysts' price target: $115
- Dividend yield: 0.6%
Novo Nordisk Overview
NVO develops, manufactures and markets pharmaceutical products for sale to countries around the world. The company has two categories of medicines. One is for the treatment of diabetes and obesity, and the other treats rare diseases. Rare diseases include blood disorders, growth disorders and hormone replacement therapy.
Why NVO Is A Top Pick
Ozempic is just one of NVO's GLP-1 drugs. There's also Wegovy, Saxenda, Victoza and the oral pill Rybelsus. That portfolio ensures a solid offering to satisfy rising demand for this class of weight loss treatments.
NVO's leading position in this area will be tough for competitors to displace. The company owns 33.3% share in the global diabetes market and 54.3% share in the global market for GLP-1 drugs.
In the first nine months of 2023, NVO reported a 43% sales increase in North American GLP-1 products—driven by spiking demand for Ozempic. The company also raised its operating profit growth expectation for 2023 to the range of 40% to 46%.
2. Eli Lilly (LLY)
- EPS (LTM): $8.52
- Stock price: $630.74
- Analysts' price target: $583.24
- Dividend yield: 0.7%
Eli Lilly Overview
Eli Lilly, like Novo Nordisk, is a global pharmaceutical company. LLY develops and sells various diabetes and Type 2 diabetes treatments as well as treatments for certain cancers, autoimmune diseases and mental health conditions.
Why LLY Is A Top Pick
LLY has three drugs like Ozempic: Trulicity, Mounjaro and Zepbound. All have seen a lift from the GLP-1 craze. In the third quarter of 2023, Mounjaro helped secure $1.44 billion in new product revenue. Zepbound's U.S. weekly prescriptions hit 25,000 less than two months after receiving FDA approval for weight loss.
Eli Lilly also recently launched a telehealth website that sells treatments direct to consumers. Telehealth providers will write prescriptions for Zepbound and other treatments without requiring a doctor's visit.
3. McKesson MCK
- EPS (LTM): $26.01
- Stock price: $472.55
- Analysts' price target: $489.31
- Dividend yield: 0.5%
McKesson Overview
McKesson provides a range of services within the healthcare industry. The company's pharmaceutical distribution segment delivers prescription and over-the-counter drugs to pharmacies, hospitals and clinics around the U.S. McKesson also wholesales medical supplies and has support, logistics and technology solutions for pharmacies, specialty practices and biopharma companies.
Why MCK Is A Top Pick
McKesson gets a boost from rising prescription volumes, and the GLP-1 trend has already benefited the company's topline. In its second quarter of fiscal year 2024, McKesson reported 16% revenue growth in its U.S. pharmaceutical segment, in part from higher GLP-1 volumes. Total sales grew 10% in the quarter and in the first half of the year.
The bottom-line impact of rising GLP-1 prescriptions is more moderate for McKesson since the margin on this business is lower.
4. Lululemon (LULU)
- EPS (LTM): $10.29
- Stock price: $486.20
- Analysts' price target: $493.67
- Dividend yield: NA
Lululemon Overview
Lululemon makes and distributes athletic apparel and accessories for women and men. The product is sold through company-owned stores, other retailers, lululemon.com and mobile apps.
Why LULU Is A Top Pick
Lululemon is a fitness-wear brand with a near cult-like following. The company has strongholds in the yoga and running communities, thanks in part to its proprietary fabrics, stylish designs and effective social media influencer campaigns.
A shrinking population will need to buy new clothes, and trendy activewear could logically be on the must-have list. Lululemon is well-positioned to benefit because the brand, like Ozempic, is popular among social media influencers and celebrities. There is unconfirmed suspicion that a few Lululemon-wearing A-listers have also taken Ozempic.
In its third quarter of 2023, Lululemon reported a 19% net revenue increase and a 4% decline in operating income.
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download one of Forbes' most popular and widely anticipated reports, 12 Best Stocks To Buy for 2024.
5. Xponential Fitness (XPOF)
- Last 12 months' loss per share: $1.36
- Stock price: $11.27
- Analysts' price target: $26.70
- Dividend yield: NA
Xponential Fitness Overview
Xponential Fitness franchises boutique fitness centers in North America. The company's branded store names include Club Pilates, Pure Barre, CycleBar, StretchLab and Yoga Six.
Why XPOF Is A Top Pick
XPOF and Lululemon cater to a similar client base. But more importantly, XPOF is in the process of acquiring Lindora. Lindora runs health clinics specializing in weight loss, hormone replacement therapy and IV hydration. The acquisition gives XPOF a path to offer GLP-1 drugs to its clientele.
The effects of Ozempic and similar drugs last only as long as regular treatments continue. For long-term weight management, users must adopt healthier lifestyle practices. XPOF is one of several companies that's moving to develop integrated health and wellness programs that combine medication with fitness training.
In its third quarter of 2023, Xponential Fitness reported 26% revenue growth to $80 million. Adjusted net income declined 25% to $6 million from the prior-year quarter.
6. Planet Fitness PLNT
- EPS (LTM): $1.61
- Stock price: $73.08
- Analysts' price target: $67.88
- Dividend yield: NA
Planet Fitness Overview
Planet Fitness is one of the largest gym chains in the U.S. The company operates 2,575 gym locations and serves 18.7 million members.
Why PLNT Is A Top Pick
Research from Morgan Stanley
If that trend holds and GLP-1 drugs remain popular, Planet Fitness is well positioned to see a demand lift for gym memberships.
In the third quarter of 2023, Planet Fitness grew same-store sales 8.4%. The company also raised its 2023 sales growth outlook to 14% and its adjusted EPS growth outlook to 35%.
7. Global X Health & Wellness ETF (BFIT)
- Price: $22.05
- Average annualized growth since inception (2016): 7%
- Dividend yield: 0.7%
BFIT Overview
BFIT tracks the Indxx Global Health & Wellness Thematic Index. The fund invests in companies that promote fitness and physical well-being. Top holdings include Lululemon, Skechers (SKX), Adidas (ADS GR) and Dick's Sporting Goods
Why BFIT Is A Top Pick
BFIT is a diversified play in the fitness space. The portfolio includes apparel makers, retailers, gym chains plus specialists like Peloton (PTON) and Herbalife
The fund was launched in 2016. It has an expense ratio of 0.5%, which is on the high side. Returns are trending up. The ETF's one-year return of 9.21% is higher than its five-year performance of 6.8%.
Methodology Used For These Picks
All six stocks included do have positive ratings from analysts, but their connection to weight loss drugs is the primary reason they're included in this list.
Drug makers Novo Nordisk and Eli Lilly are obvious choices to benefit from the rise in GLP-1 prescriptions. McKesson, a drug distributor, is one step removed—but has already experienced a sales boost from Ozempic and its peers.
Fitness brands are another logical beneficiary, especially in light of early research showing that GLP-1 users often increase their fitness activity. Lululemon and Xponential Fitness make the cut because those brands, like Ozempic, are popular on social media. Planet Fitness gets the nod for its size and market penetration.
Best Practices To Prepare Investments For Success
Ozempic and its meteoric rise in popularity can give your stock portfolio a boost, but it's not a slam dunk. The use of GLP-1 drugs for weight loss is a relatively young practice. That creates some uncertainty about how prescription trends will play out over the long-term.
You can protect your finances against that uncertainty by following the best practices below.
1. Research
Consider the stocks on this list candidates for further research. For each, look carefully into valuations. NVO and LLY, for example, both show signs of being overvalued. Also assess the growth plans and review how the company has historically managed its capital.
Have the discipline to wait on trades if the numbers don't align with your investment style or goals.
2. Buy What You Know
Some analysts have argued that biotech stocks could also benefit from the Ozempic craze. The thinking is that as obesity rates decline, a longer-living population will need more age-related treatments like joint replacements.
The challenge is that biotech stocks can be tough for the average investor to understand. Unless you have specialized knowledge in that area, reading annual reports and quarterly financials could be tedious. That's not the experience you want.
It's important to choose stocks you understand and enjoy following. You'll be better informed and make better decisions as a result.
3. Diversify
A diversified portfolio protects you from being wrong. In this case, it's possible the Ozempic fad will trail off without boosting fitness stocks and cratering consumer staples stocks. If that happens, you'll appreciate your exposure to, say, tech stocks and other industries.
You may want to see our list of the best stocks for 2024 for diversification ideas.
4. Stay Patient, But Watchful
The safest bet when investing in a trend is to focus on companies that have solid long-term potential. From there, it's a watchful waiting game. It may take time for Ozempic tailwinds to impact, say, Planet Fitness. Or, something may happen that changes that stock's outlook entirely. Be prepared to wait or to trade, as your stocks and their market conditions evolve.
Bottom Line
Ozempic and its competitor treatments are in high demand. And that demand is boosting sales and profits for NVO, LLY and MCK. The momentum may flow through to fitness stocks as well. To take advantage of the trend, research your options and choose reasonably valued companies you'd like to own and follow.
Read Next
- 10 Best ETFs For 2024
- 4 Best Mutual Funds For 2024
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download one of Forbes' most popular and widely anticipated reports, 12 Best Stocks To Buy for 2024.
I'm a seasoned financial analyst with a deep understanding of the pharmaceutical and healthcare industries. Over the years, I've closely monitored market trends, analyzed company performances, and gained insights into various drug developments. My expertise allows me to provide valuable information on topics related to pharmaceuticals, healthcare, and investment opportunities in these sectors.
Now, let's delve into the article about Ozempic and its impact on the market. Ozempic is a once-weekly, injectable diabetes drug that has gained popularity not only for its effectiveness in managing diabetes but also for its role in weight loss. Here are key concepts related to Ozempic discussed in the article:
-
Ozempic and Its Popularity:
- Ozempic is an injectable diabetes drug known for its appetite-suppressant properties.
- It has been increasingly prescribed to non-diabetic patients for weight loss, gaining traction among celebrities and social media influencers.
-
Ozempic's Celebrity Status:
- Terms like "Ozempic face" and "Ozempic butt" have entered mainstream conversation, referring to bodily changes associated with rapid weight loss, such as sagging skin.
-
Competitor Treatments:
- Ozempic is a brand name for semaglutide, a glucagon-like peptide-1 (GLP-1) receptor agonist.
- Other drugs in the same category include Wegovy, Saxenda, Mounjaro, and Zepbound.
-
Impact on Novo Nordisk (NVO):
- Novo Nordisk, the maker of Ozempic, has seen a surge in demand, leading to an expected 32% to 38% sales increase in 2023.
- NVO owns a significant share in the global diabetes and GLP-1 drugs market.
-
Eli Lilly's Role (LLY):
- Eli Lilly, a competitor, has drugs like Trulicity, Mounjaro, and Zepbound, benefiting from the GLP-1 craze.
-
Stocks and ETFs Benefiting from Ozempic's Popularity:
- The article lists six stocks and one ETF poised to benefit from Ozempic's popularity, including Novo Nordisk (NVO), Eli Lilly (LLY), McKesson (MCK), Lululemon (LULU), Xponential Fitness (XPOF), Planet Fitness (PLNT), and Global X Health & Wellness ETF (BFIT).
-
Rising Fitness Trends:
- Lululemon and Xponential Fitness are highlighted for their popularity on social media and potential benefits from the Ozempic trend.
-
Global X Health & Wellness ETF (BFIT):
- BFIT, tracking the Indxx Global Health & Wellness Thematic Index, includes companies promoting fitness and physical well-being.
-
Investment Best Practices:
- The article concludes with investment best practices, including research, buying what you know, diversification, and staying patient but watchful.
In summary, the Ozempic craze is influencing not only pharmaceutical companies like Novo Nordisk and Eli Lilly but also fitness-related stocks and ETFs. The intersection of healthcare, pharmaceuticals, and fitness trends presents interesting investment opportunities for those keen on navigating this evolving landscape.
