Momentum investing is a strategy that focuses on riding the wave of a stock’s recent price trend. Investors who embrace this approach aim to ‘buy high’ with the expectation of selling even higher, capitalizing on the stock’s momentum. While many investors seek momentum opportunities, defining and identifying them can be challenging. The Zacks Momentum Style Score, part of the Zacks Style Scores system, offers a valuable tool for assessing momentum potential.
Eli Lilly (LLY), with its current Momentum Style Score of B, is a compelling example of a stock with strong momentum. The Momentum Style Score considers several key factors, including price changes and earnings estimate revisions, to gauge a stock’s potential for continued upward movement. It’s worth noting that the Style Scores work in conjunction with the Zacks Rank, a stock rating system with a proven track record of outperformance. Eli Lilly currently holds a Zacks Rank of #2 (Buy), indicating strong potential for outperformance.
Let’s delve into the specific factors driving LLY’s momentum:
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Price Performance:
Eli Lilly’s stock has demonstrated solid price performance in both the short and long terms. Over the past week, LLY shares have risen 0.76%, outperforming the Zacks Large Cap Pharmaceuticals industry’s gain of 1.08%. This positive trend extends to the monthly performance, with a 20.59% increase in LLY shares compared to the industry’s 6.36%. Looking at longer timeframes, LLY’s stock has surged 10.48% over the past quarter and 71.36% in the last year, significantly outpacing the S&P 500’s respective gains of 5.01% and 23.98%.*
Volume Activity:
A rising stock with above-average volume typically signals bullish sentiment. Currently, LLY’s average 20-day trading volume stands at 3,298,897 shares, indicating healthy activity.*
Earnings Outlook:
Earnings estimate revisions are a crucial component of the Zacks Momentum Style Score. In the case of LLY, the recent trend has been encouraging. Over the past two months, 10 earnings estimates for the full year have been revised upwards, compared to just one downward revision. This positive sentiment has contributed to an increase in LLY’s consensus estimate, rising from $13.61 to $16.23 in the past 60 days. Looking ahead to the next fiscal year, 8 estimates have been revised upward, with no downward revisions.In conclusion, Eli Lilly’s positive price action, healthy volume, and improving earnings outlook paint a compelling picture for a stock with strong momentum. Its #2 (Buy) Zacks Rank and Momentum Score of B solidify its position as a potential near-term winner for investors seeking momentum-driven opportunities.
