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 slimming drug star Eli Lilly and British defense giant BAE leading the way.

UK retail investors are backing US pharmaceutical giant Eli Lilly on expectations that it will win approval for a new obesity treatment, eToro data showed.

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

Meanwhile, British defense firm BAE Systems reported growth of 30 percent over the same period, which came before the tragic news from Israel over the weekend.

Meanwhile, investors cooled on First Republic Bank and Activision Blizzard, with holdings down 18% and 13%, respectively.

Eli Lilly is awaiting approval for a weight-loss formulation of its diabetes drug Mounjaro

The US Food and Drug Administration is expected to give the go-ahead to a slimming formulation of Eli Lilly’s diabetes drug Mounjaro, which analysts say could lead to big sales in the coming years.

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

But the treatment of obesity and diabetes is expected to be a major growth driver in the sector in the coming years.

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

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

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

UK investors using eToro backed Eli Lilly and AI firms in the third quarter

eToro Global Market Strategist Ben Laidler said: “Big pharma is increasingly turning its sights on the global obesity crisis and some favorites have emerged in recent months.

“Retail investors clearly recognize the huge potential for growth in this area, and it’s no surprise that a drugmaker specializing in this area has made our list of top performers.”

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

The rise also attracted 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 for treating obesity is clear from the success Novo Nordisk is achieving with Weygovy.

“The clinical data from Lilly’s drug, which is currently sold to treat diabetes under the brand name Mounjaro, is also compelling. Novo Nordisk also recently announced leading data from a study showing that in patients taking the anti-obesity drug, it prevented serious cardiovascular outcomes.

“This is likely to help further the medical evidence for treating obesity as a disease and expand the market potential.”

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

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “Over the next few years, pharmaceutical giants face hundreds of millions of dollars in losses as patents expire, meaning prices of once blockbuster drugs could come under huge pressure .

“Obesity and diabetes treatments are seen as the next wave of pharma revenue, and investors don’t want to miss out on the swell.”

Shares of Eli Lilly are up about 75% in the past year