For a lot of combating obesity, recent medications have been “a gift,” as Oprah Winfrey recently described it in declaring she was “done with the shaming.” Investors in drug manufacturers Novo Nordisk and Eli Lilly might use the same term for the returns they’ve realized over the past 12 months. U.S.-listed shares of Novo Nordisk, the maker of Ozempic and Wegovy, have climbed nearly 52% 12 months to date, while Lilly’s have gained 56% over the same period. Lilly’s Zepbound recently entered the weight loss market, and is off to a strong start. It has the same energetic ingredient, tirzepatide, as its Mounjaro type 2 diabetes treatment. But what’s ahead for the weight loss trade in 2024? “We’re very optimistic about that market, and we’re at the very, very early innings,” said Andy Acker, a portfolio manager on Janus Henderson’s health-care team. The firm has held positions in each stocks over the past decade, and expects that there is room in the category for multiple firms to create “strong, profitable recent franchises that might help a lot of patients around the world.” Lilly and Novo have the market to themselves at the moment. According to FactSet, the majority of Wall Street analysts maintain buy rankings on each stocks. The views are a bit more positive for Lilly, but some analysts have grown more cautious as valuations have gotten richer. Still, with a mean price goal of $646, Lilly shares could climb 13% from Friday’s close, the data provider said. Each firms have been investing heavily to construct out manufacturing capability, as the supply today is far short of the demand for the drugs. Investors will likely be eager to see how the firms manage that balance in 2024. Wall Street expects the market for these drugs will swell to greater than $100 billion before the end of this decade. Beyond Ozempic In 2024, investors might want to have a look at several other firms, each large and small, vying to enter the category with their very own versions of these drugs. The brand new drugs mimic incretin hormones found in the gut, like GLP-1 and GIP, to suppress appetite and regulate insulin secretion. In doing so, the drugs help patients lose between 15% to 20% — or more — of their weight. Nevertheless, since the drugs work as a hormone alternative, patients can regain weight in the event that they stop treatment. Next-generation versions is perhaps longer acting or give you the chance to be taken orally as a substitute of through a once-a-week injection as is now the case. Acker also expects further innovation to occur as firms develop drugs to help manage unwanted effects akin to the loss of lean muscle mass . Regeneron and Biohaven are two firms Janus owns which might be working on drugs to help with muscle preservation. “How will we lose weight while preserving muscle? How can now we have higher maintenance therapy that is easier for patients to take?,” Acker said. “These are all unmet medical needs that we’re investing in that might help address big challenges as we roll them out globally,” he said. Buzz has been constructing ahead of an expected update from Amgen on its anti-obesity drug, mari-tide (formerly AMG 133). The stock received several upgrades from analysts this month, citing this event as a potential catalyst. “Latest growth segments are key to the story, as longer-term drivers of value (with sights on post-2030) and the bridge to cross from the trailing legacy business assets to the emerging oncology, [inflammation and immunology], rare disease, and cardiometabolic/obesity platforms,” RBC Capital analyst Gregory Renza wrote in a research note upgrading Amgen to outperform from sector perform on Dec. 12. Renza expects the updated trial results to show how competitive Amgen’s product is compared to the existing treatments. Other firms working on incretin medications include Pfizer and Structure Therapeutics , which have each had some recent setbacks in their programs. AstraZeneca has jumped into the race by licensing a GLP-1 drug in development from Eccogene . Beyond weight loss One of 2023’s most pivotal events in the space was Novo Nordisk’s release of top line results from its Select trial in August . This data, together with the full results published in November, showed that taking semaglutide, the energetic ingredient in Wegovy and Ozempic, to address obesity gave patients greater than a cosmetic profit. It also lowered their risk of heart problems . In coming years, more will likely be learned about other health outcomes, which should proceed to shape treatment and medical health insurance coverage. “Overall we see 20+ relevant trials ongoing which might be set to read out over the next few years, providing a regular cadence of information on the potential broader health advantages of AOMs [anti-obesity medications],” said Goldman Sachs analyst Chris Shibutani, in a research note in mid-December. “Results from these studies are anticipated to have a material knock-on effect in terms of how obesity as a disease is contextualized and managed, and ultimately how widely these drugs are utilized and really importantly, reimbursed.” Beyond pharma stocks With each data release, there may be volatility. In 2023, the exuberance around weight loss drugs roiled markets in many unexpected ways. Since obesity and chubby are so common, many investors began to theorize about how these life-changing drugs could start to ripple through society. The result was unexpected upheaval in some sectors. Starting with the Select study data, investors sold shares of restaurant, food and beverage stocks, expecting that these firms would lose some of their best customers . Medical device stocks of every kind were hammered as speculation grew that folks would not want to have bariatric surgery when they might take a drug as a substitute, or they would not need to have their knees and hips replaced once they slimmed down. PODD YTD mountain Insulet shares 12 months to date The list of affected sectors grew long. For a while, it appeared like hardly any area of the economy would escape. Sooner or later, there was speculation airlines would save fuel as they transported lighter passengers. One other day, packaging stocks would unload on the belief that falling sales of tortilla chips, ice cream and cookies , could be a blow for the firms that make the boxes and bags these products come in. Wall Street analysts rushed to calm investors, saying these changes would not occur overnight — in the event that they happened in any respect. Since November, some of the worst hit stocks have trimmed their losses, and a few of the battered names are ending on up lists of stocks to buy in 2024. Leerink Partners analyst Mike Kratky, for example, named diabetes device makers Insulet and Dexcom as two of his top three picks heading into 2024. (The third was Vericel , which works in sports medicine and burn care.) “We see significant valuation dislocations remaining in MedTech following the sharp GLP-1-driven sell-off in 3Q23,” Kratky said in a research note last week. DXCM YTD mountain Dexcom shares 12 months to date Kratky stays cautious about stocks which might be exposed to “headline risk” tied to obesity medications, but sees opportunity for names that could have “upcoming catalysts that would remove the perceived GLP-1 overhang.” Insulet shares have lost nearly 27% in 2023, having dipped as little as $125.82 in October. Nevertheless, Kratky expects data from Insulet will help support the use of insulin pumps at the same time as more patients shift to GLP-1 medications. He has a $270 price goal on the stock, which means 25% upside ahead. Dexcom has clawed its way back to almost an 8% gain this 12 months. But the shares traded as little as $74.75 in October. Leerink sees the stock rising as high as $144, or 17% above Friday’s close. The affected firms have also been very vocal in addressing how they plan to coexist with these weight loss products. For instance, food firms akin to Nestle have discussed how they could develop protein bars and drinks for those on incretin medications. ‘The Oprah effect’ The brand new 12 months can even bring more education about obesity as a chronic disease, more discussion about how these drugs work, and hopefully more realistic expectations about their advantages. Many reports in 2023 showed how misunderstood obesity and chubby are, even amongst those that experience it themselves. Speaking on a panel published on Oprah Each day in September, Winfrey criticized weight loss drugs and said she needed to shed kilos on her own, adding that taking a medication was “the easy way out.” WW YTD mountain WW shares are up 143% in 2023. “I’ve got to do it the hard way. I’ve got to keep climbing the mountains. I got to keep suffering, I got to do this because otherwise I in some way cheated myself,” she said at the time. As they’ve in the past, Winfrey’s comments moved markets. Winfrey is an investor and sits on the board of Weight Watchers parent WW International , which runs its traditional weight management program in addition to Sequence, a telehealth platform that assists its users in obtaining weight loss medicines. After Winfrey’s September comments, the stock took a hit. But WW shares surged 25% last week. The motion got here after People magazine published an interview with Winfrey in which she said she is using weight-loss medication as a “maintenance tool.” With those gains, WW shares are up 144% 12 months to date, though the stock has fallen sharply in recent years. If the gains hold in the last week of 2023, it is going to be the first positive 12 months for the stock since 2017, according to FactSet. In the People cover story, Winfrey said: “The indisputable fact that there’s a medically approved prescription for managing weight and staying healthier, in my lifetime, seems like relief, like redemption, like a gift, and never something to hide behind and once more be ridiculed for. I’m absolutely done with the shaming from other people and particularly myself.” – CNBC’s Michael Bloom contributed reporting.