Eli Lilly investors have received some really excellent news in recent months with a notable exception of how the stock has performed. Shares of Eli Lilly entered Wednesday’s session off nearly 9% for the reason that Oct. 30 close, the day that the drugmaker’s messy third-quarter earnings report sent the stock down 6%. Zoom out further to incorporate that earnings hit — and over the past six months, the one Club name doing worse than Eli Lilly is Constellation Brands , slumping almost 15% and 16%, respectively. Stocks — even people who have beaten the S & P 500 in each of the past five years like Eli Lilly has — undergo rough patches every now and then. What makes Lilly’s meager performance of late stand out is that in this era, the corporate’s standing within the fierce and lucrative obesity drug race has only gotten more formidable. In late November, hopeful challenger Amgen reported disappointing mid-stage trial results for its experimental obesity treatment often known as MariTide. Then on Dec. 20, Wegovy maker Novo Nordisk — Lilly’s chief weight-loss drug rival — saw its stock get crushed on the back of weaker-than-expected data for its next-generation obesity treatment called CagriSema. Sandwiched in between those updates from peers were Eli Lilly’s own trial results on Dec. 4 , which showed its obesity drug Zepbound beat Wegovy within the first-ever head-to-head study comparing them. LLY 1Y mountain Shares of Eli Lilly over the past 12 months. The specter of competition within the fast-growing obesity market, which some on Wall Street expect to be value $100 billion annually by the top of the last decade, has loomed over Lilly even during its recent run of success. While the stock has gained about 3% for the reason that session before Amgen’s release, why have not these positive developments translated to more upside? The reply, analysts say, is concern over what Eli Lilly’s upcoming fourth-quarter earnings report in early February could have in store. “In our view, recent LLY stock movements and investor conversations suggest there are questions around 4Q results and 2025 guidance,” analysts at Morgan Stanley wrote in a note to clients this week. The analysts cited how poorly shares of Amgen and Novo Nordisk have performed within the wake of their respective trial updates and contrasted that with how Eli Lilly has traded. If not for uncertainty around the outcomes and guidance, Morgan Stanley argued that Lilly stock “would have outperformed more significantly.” For his or her part, analysts at JPMorgan labeled fourth-quarter dynamics “an overhang on the story” at Lilly. Each research firms lowered their combined U.S. quarterly revenue estimates for Lilly’s most significant product, tirzepatide, which is sold under the name Zepbound for obesity and Mounjaro for type-2 diabetes. Morgan Stanley sees $5.3 billion in U.S. sales, down from $6 billion previously, on account of recent prescription data trends. JPMorgan’s model projects a combined $5 billion in U.S. revenue. “There’s already somewhat of an expectation that Tirzepatide 4Q sales could are available below consensus,” Morgan Stanley wrote. An important takeaway, though, is that Morgan Stanley and JPMorgan usually are not wavering of their long-term optimism on Eli Lilly, reiterating their buy-equivalent rankings on the stock. And neither are we. We even have a buy-equivalent 1 rating on Lilly shares. Nevertheless, the truth is that, until the corporate reports the numbers before the bell on Feb. 6 and provides its official 2025 outlook, the stock could struggle to mount a sustained rally. Investors will likely look past a fourth-quarter miss if the 2025 outlook is encouraging. Supply of Zepbound and Mounjaro figures to be a significant factor in determining Eli Lilly’s financial success this yr. The influential JPMorgan Healthcare Conference — set to kick off next week in San Francisco — offers the chance to enhance sentiment before earnings arrive. CEO David Ricks is scheduled to take part in a “fireside chat” at 5:15 p.m. ET on Tuesday. On the conference a yr ago, Ricks’ comments focused more on the massive picture opportunity relatively than near-term financial updates, but investors still loved what he needed to say, because the stock jumped to what was then a record high in the next session. The CEO has got lots of good things to speak about this time around, too, even when the recent stock chart suggests otherwise. (Jim Cramer’s Charitable Trust is long LLY. See here for a full list of the stocks.) 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An Eli Lilly & Co. Zepbound injection pen, March 28, 2024.
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Eli Lilly investors have received some really excellent news in recent months with a notable exception of how the stock has performed.
