Hot stocks revealed: Surge in UK investors backing US weight-loss drug star Eli Lilly and defence giant BAE

Investment platform eToro has revealed the hot and cold stocks among its UK investors, with US weight loss drug star Eli Lilly and British defense giant BAE leading the way.

UK retail investors are supporting US pharmaceutical giant Eli Lilly in hopes it will win approval for a new obesity treatment, eToro data suggests.

New York-listed Eli Lilly saw a 32 per cent quarter-on-quarter rise in UK shareholders on the platform in the three months to the end of September, marking the biggest proportional change seen by any stock during the period.

Meanwhile, British defense company BAE Systems saw a 30 percent rise over the same period, which came before the weekend’s tragic news from Israel.

At the same time, investors cooled off on First Republic Bank and Activision Blizzard, with their holdings falling 18 percent and 13 percent, respectively.

The U.S. Food and Drug Administration is expected to give the green light to a weight-loss formulation of Eli Lilly’s Mounjaro diabetes drug, which analysts say could drive bumper sales in the coming years.

It comes at a time when the pharmaceutical industry faces losing hundreds of millions of dollars in annual revenue as drug patents expire.

But treatments for obesity and diabetes are expected to be a major driver of growth in the sector in the coming years.

Analysts at Barclays predict the global obesity drugs market could be worth £100bn by 2030, with trials of treatments called GLP-1 showing evidence they can reduce weight by up to 20 per cent.

Eli Lilly’s Mounjaro has rivals in the market with Novo Nordisk, which is achieving impressive sales with its drugs Ozempic and Wegovy.

Pfizer, Amgen and other big pharmaceutical companies are also understood to be developing their own treatments.

eToro global market strategist Ben Laidler said: “Big Pharma is increasingly turning its attention to the global obesity crisis and some pioneers have emerged in recent months.”

“Retail investors clearly recognize the enormous growth potential in this area and it is not surprising that a drugmaker specializing in this area has made it to our most promising list.”

Indianapolis-based Eli Lilly has seen its shares soar nearly 75 percent over the past 12 months, underscoring enthusiasm among investors about Mounjaro’s prospects.

The rise also caught the attention of retail investors on the Hagreaves Lansdown platform, with the stock becoming the fourth most-owned foreign company at the end of the summer.

Linden Thomson, portfolio manager at AXA Investment Managers, said: “Lilly has been rewarded by investors for its recent clinical data in the treatment of obesity and Alzheimer’s disease.

‘We expect both drugs to be approved in the US in the coming months. The commercial opportunity to treat obesity is clear from the success that Novo Nordisk is achieving with Weygovy.

‘The clinical data for Lilly’s drug, currently marketed to treat diabetes under the brand name Mounjaro, are also compelling. Novo Nordisk also recently announced topline data from a trial that showed patients taking the anti-obesity drug avoided major cardiovascular outcomes.

“This is likely to help expand medical evidence to treat obesity as a disease and expand market potential.”

Thomson added that AXA IM also “remains optimistic” about the “more controversial” opportunity of Eli Lilly’s new Alzheimer’s treatment and similar drugs in the sector.

Sophie Lund-Yates, senior equity analyst at Hargreaves Lansdown, said: “Over the next few years, pharmaceutical giants will face losing hundreds of millions of dollars as patents expire, meaning drug prices that were once a huge success may find themselves under enormous pressure.

“Obesity and diabetes treatments are seen as the next wave of revenue for the pharmaceutical sector and investors don’t want to miss out.”