Need to Know: Why Coke, others, may be spared, as a $100 billion opportunity in weight loss drugs unfolds says JPMorgan

All that is largely thanks to love for tech biggies like Apple and Tesla, as savvy investors picked up on their importance. And who wouldn’t want to hop on the next big theme and be sitting on big gains in a decade or two.

That brings us to our call of the day, from JPMorgan, which is flagging a “$100 billion plus opportunity” from emerging weight-loss drugs, or GLP-1s — glucagon-like peptide-1 gut hormones that can help control blood sugar levels and lower appetites.

“We forecast U.S. sales for the GLP-1 category to exceed $100 billion in annual sales over time, split roughly 50/50 in diabetes and obesity. Our global market estimate is [more than] $140 billion by 2032,” said a team led by analyst Nicholas Rosato, whose estimates crush the $77 billion in sales by 2030 predicted by Morgan Stanley this summer.

His team is bullish on U.S. and Europe picks Eli Lilly LLY, -1.37% and Novo Nordisk NVO, +0.86% NOVO.B, -1.11%, and they see plenty of upside earnings surprises ahead for that pair. Note, the WSJ points out that Novo Nordisk, Europe’s most valuable company, is vulnerable to selling in Europe at times as Danish fund managers can’t hold more than 10% of the drugmaker.

Laying out other beneficiaries, they tamp down worries over medtech device makers — they are bullish views on Insulet PODD, +1.57%, Dexcom DXCM, +0.06% and Inspire Medical INSP, -4.13% and Gerresheimer GXI, +0.96%.

In life sciences, they like Thermo Fisher TMO, -0.55%, Catalent CTLT, +0.14% and Avantor AVTR, +0.10%, which makes process ingredients used in those diabetes/weight loss drugs, and see incremental gains seen for Danaher DHR, -0.86%, Repligen RGEN, -1.51% and Agilent A, +0.10%.

JPMorgan analysts then address the hot-button topic — how those drugs will cut into the American love for snack foods and drinks.

Also read: The dark side of the weight-loss-drug craze: eating disorders, medication shortages, dangerous knockoffs

Walmart WMT, +1.42% CEO John Furner sent shares of Coca-Cola KO, -0.90% and PepsiCo PEP, +0.05% tumbling a few weeks ago after he blamed GLP-drugs for lower spending on groceries and high-calorie snacks. (Coke lifted guidance as it reported forecast-beating results on Tuesday and shares are up) Morgan Stanley has been among Wall Street banks flagging this likely fallout.

Echoing this, JP Morgan analysts say the impact is “real and potentially not small,” and share a survey showing GLP-1 users prefer meat, produce and dairy to snacks, sugary drinks and high carb items. Some caveats here, just under 500 people were surveyed and they say it’s hard to tell if those category shifts will persist, they say:

To this effect, Rosato and the team are bullish on protein drink maker BellRing BRBR, +0.35% and natural and organic grocery chain Sprouts Farmers Market SFM, +0.40% (neutral rated). They are also bullish on Coca-Cola, which they see as “relatively more insulated” from GLP-1 fallout as around 80% of its volumes are international and 19 out of its 20 top drinks offer sugar free alternatives. They also like Keurig Dr Pepper KDP, -1.12%, as it’s less exposed to sugary drinks.

What else? Within U.S. food delivery they are prefer the more global player Uber UBER, +0.19% to DoorDash DASH, +2.38% and Instacart CART, -0.93% for its potential from secular growth of online grocery delivery.

Read: Equity strategist who called stock rally in first half says S&P 500 won’t resume climb until spring 2024

The markets

Stock futures ES00, +0.50% YM00, +0.38% NQ00, +0.54% are higher as bond yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y hold steady, following Monday’s dramatic 5% run for the 10-year note. Oil prices CL.1, +0.09% are modestly higher, and bitcoin BTCUSD, +9.66% is up after reaching a nearly 18-month high on Monday over optimism that an ETF based on the crypto will soon be approved in the U.S.

The buzz

Earnings are rolling out from big names on Tuesday — GE GE, +0.58% lifted guidance and the stock is climbing, 3M MMM, -1.10% is up on a higher outlook and profit beat and General Motors GM, -1.48% reported blowout earnings and shares are up. Alphabet GOOGL, +0.66% (see preview), Microsoft MSFT, +0.81% (see preview), Visa V, -0.79% and Texas Instruments TXN, -1.01% are coming after the market close.

Read: Big-tech results will decide ‘where we go from here’ amid investor caution. They would fall if it weren’t for this one company

The S&P flash U.S. manufacturing and services purchasing managers indexes are due at 9:45 a.m.

Global demand for fossil fuels will peak before the end of the decade, as geopolitics hasten the move to renewable energy, says the International Energy Agency.

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The tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

Ticker	Security name
TSLA, +0.04%	Tesla
NVDA, +3.84%	Nvidia
AMC, +0.88%	AMC Entertainment
AAPL, +0.07%	Apple
GME,	GameStop
MARA, +12.76%	Marathon Digital
SPOT, +3.13%	Spotify Technology
PLTR, +0.56%	Palantir Technologies
MSFT, +0.81%	Microsoft
NIO, +0.13%	NIO

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