Lilly's Shares Decrease Following Shortfall in GLP-1 Sales Revenue Estimations; Potential Difficulties Facing the Stock?
Eli Lilly, with a market cap approaching $650 billion, has been on a roll thanks to its GLP-1 drugs, Mounjaro and Zepbound. Over the past five years, the company's shares have skyrocketed over 400%. Lately, however, the stock has taken a hit, losing nearly 21% in value over the past three months. The company's updated revenue projections for its GLP-1 drugs came in below expectations for the most recent quarter, causing a 7% drop in share price on January 14th.
The fourth quarter of 2024 should see revenue hit $13.5 billion, a whopping 45% increase year over year. But investors were disappointed with the numbers, especially the actual figures for Mounjaro and Zepbound’s sales, which came in below analyst expectations. Mounjaro, at $3.5 billion, fell short of the expected $4.4 billion, while Zepbound, estimated for $2.1 billion, slightly surpassed expectations of $2 billion, but still missed the mark.
Though the overall guidance for 2025 looks strong, it’s measured between $58 billion and $61 billion, which is a bit higher than analysts’ expectations of $58.4 billion. Nevertheless, Eli Lilly expects its top two drugs to have strong growth.
Skepticism among investors could be attributed to Eli Lilly's hefty valuation. At one point, the stock was trading over 100 times its trailing earnings and still isn't exactly cheap even after the recent fall, with a P/E multiple of around 80 and a forward P/E multiple of 32. This means investors expect big things from the company, and any missed expectations can trigger steep corrections.
Despite the current market turbulence, the prognosis for Eli Lilly's future remains promising. Long-term investors may find the dip a prime opportunity to acquire shares of this top healthcare stock. The company's commitment to increasing production capacity and filling newly-approved indications for Zepbound will contribute to its growth potential. And let's not forget about Mounjaro and Zepbound, the two remarkable drugs that have the power to generate significant growth for the company.
Keep in mind that quarterly results may come across as discouraging, but it's vital to maintain a long-term perspective. Eli Lilly's position in the GLP-1 market is robust, and its promising pipeline includes drugs in the pipeline, such as orforglipron, which could receive approval in 2026. As the market for these treatments grows—driven by increased awareness and insurance coverage—Eli Lilly's future looks bright.
Investors might be cautious about their investing decisions in Eli Lilly due to its high finance valuation, with the stock trading at over 100 times its trailing earnings and having a P/E multiple of around 80. However, the company's financial performance and future growth potential, driven by drugs like Mounjaro and Zepbound, still make it an attractive option for long-term investors looking to invest money in the healthcare sector.
