Like many pharma stocks, Eli Lilly (LLY -4.58%) offers investors a bit of safety -- and it's an element you can count on during any economic environment. This is because patients need their medicines and will continue to order them through good times and more difficult times as well. But Lilly also is bringing investors another element that isn't as common in the industry -- and that's explosive growth.

This is thanks to the company's development of treatments in an area that's in high demand and is forecast to continue along this path throughout the decade. I'm talking about weight loss drugs. Lilly makes tirzepatide, commercialized under the name Zepbound for weight loss and Mounjaro for type 2 diabetes. But doctors have prescribed either one for patients aiming to shed pounds. Both of these products quickly became blockbusters and, along with drugs from Novo Nordisk, dominate the market.

All of this has helped Lilly's revenue climb in the double digits in recent quarters and the stock price to take off. The shares have advanced more than 200% over the past three years. Now the question is: Is it too late to get in on this weight loss giant, or is Lilly stock still a buy? Let's find out.

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What's behind Lilly's double-digit revenue growth

So, first let's talk about the Eli Lilly story so far. It's important to remember that Lilly isn't only a weight loss drug company; it also sells a wide variety of products across treatment areas -- from neuroscience to immunology. And in the recent quarter, even if we exclude the weight loss treatments, revenue climbed 20%, showing Lilly's other products are also contributing to growth. So Lilly isn't dependent on just one or two products, and that's positive. Instead, these high-growth weight loss drugs are a fantastic addition to an already solid portfolio. With them, Lilly's quarterly revenue surged 45%.

Tirzepatide is part of a class of drugs known as dual GIP/GLP-1 receptor agonists. These act on hormones involved in the digestion process to help control blood sugar levels and appetite. The U.S. Food and Drug Administration (FDA) first gave it the nod for type 2 diabetes in 2022 then approved it specifically for weight loss in 2023.

Demand for tirzepatide has been so high that it immediately landed on the FDA's drug-shortage list following approval and remained there until recently. The situation was the same for Novo Nordisk's semaglutide, commercialized as Ozempic and Wegovy. These drugs all have produced impressive results in clinical trials and in the real world, and that has kept them flying off pharmacy shelves. On top of this, analysts expect the weight loss drug market to soar from today's levels. Morgan Stanley predicts a 15-fold increase to more than $100 million by the end of the decade.

Will Viking and Amgen beat Lilly?

Of course, by that time, Lilly and Novo Nordisk may see competitors emerge. For example, Viking Therapeutics is studying its dual GIP/GLP-1 receptor agonist in late-stage trials right now. And just recently Amgen said it's started two late-stage trials for its monthly injectable candidate (Lilly and Novo Nordisk drugs are weekly injectables). If all goes well for these or other potential rivals, Lilly may face more competition in the years to come.

Now, let's get back to our question: Is Eli Lilly a buy? It's true that competition in the weight loss drug market is a risk, but there's reason to be confident about Lilly's potential to continue dominating the space. This is because Lilly isn't standing still; it's also pushing exciting weight loss candidates through the pipeline. So, there's room for smaller companies to succeed in the market, but that doesn't mean they will disturb today's leaders.

What's ahead for Eli Lilly

Lilly expects data readouts this year from a phase 3 trial of retatrutide, a weight loss candidate it's suggested may be even more effective than its current drugs, and orforglipron, a weight loss candidate in pill form. And Lilly may even submit orforglipron for regulatory approval as early as this year. If Lilly is able to commercialize a new weight loss product in the next few years, it could reinforce its leadership in the market.

Considering Lilly's growth, the stock has traded at valuations you'd expect to see for a growth stock, reaching as high as 75 times forward-earnings estimates over the past year. But valuation has come down significantly from that peak to 37 times these expectations, and this bargain price, along with the company's potential for lasting leadership in the weight loss drug market, makes it a fantastic buy today.