Eli Lilly’s Recent Slump: A Buying Opportunity in Disguise?
A Rocky Start to 2025
Pharmaceutical giant Eli Lilly (NYSE: LLY) has had a tumultuous start to 2025. After a remarkable 33% gain in 2024, the company’s stock has taken a hit, dropping by as much as 8% on January 14 and ending the day down around 6%. Year-to-date, share prices are down about 1.4%. But what’s behind this sudden downturn?
Revising Guidance: A Warning Sign?
During its recent earnings report, Eli Lilly revised its full-year guidance, projecting sales of $45 billion for 2024 – a decrease from its prior forecast. This news sent investors scrambling, leading to a sell-off of the company’s stock. However, it’s essential to understand the reasons behind this revision.
Missing Guidance: A Cause for Concern?
Companies often miss their guidance, and it’s not necessarily a reason to panic. What matters is the underlying reason for the shortfall. In Eli Lilly’s case, the company is still on pace to grow annual revenue by 32%, a remarkable feat.
The Real Culprit: GLP-1 Drugs
A closer look reveals that the revised guidance is largely due to lower-than-expected sales of its blockbuster GLP-1 drugs, Mounjaro and Zepbound. Despite this, both treatments are expected to generate record revenue in the fourth quarter, indicating strong demand.
A Buying Opportunity?
With Eli Lilly’s stock hovering near its lowest level in six months, now might be an excellent time to take advantage of the depressed price action. The company’s oncology business is thriving, and its medications for Alzheimer’s disease and eczema have yet to reach scale. With management projecting another year of 32% revenue growth in 2025, Eli Lilly remains a rock-solid investment opportunity.
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