Lilly Moves Past 50-Day Average: Should You Buy the Stock Now?

Eli Lilly (LLY) stock has broken above its 50-day moving average, signaling a potential bullish trend, despite trading below it since Q1 results. Mounjaro and Zepbound are key revenue drivers, accounting for 48% of Q1 2025 revenues at $6.15B, with growth expected from international launches and new indications. LLY projects 2025 revenues of $58B-$61B, driven by these drugs and a robust pipeline, though competition in the obesity market and declining prices pose headwinds.

Analysis

Eli Lilly and Company (LLY) stock has recently crossed its 50-day simple moving average, a technical indicator suggesting potential short-term bullish momentum after a period of trading below this average since its Q1 earnings announcement, which was impacted by an earnings miss and guidance cut. The company's key growth drivers, Mounjaro and Zepbound, accounted for approximately 48% of total revenues in Q1 2025, generating $6.15 billion, with sales rebounding due to international launches and improved supply after slower growth in late 2024. Lilly projects robust 2025 revenues between $58 billion and $61 billion, representing an impressive 32% year-over-year growth, fueled by these GLP-1 drugs, newly approved treatments like Omvoh and Kisunla, and expansion into new indications such as Zepbound for obstructive sleep apnea. The pipeline remains strong, particularly in obesity with late-stage candidates orforglipron and retatrutide, and positive initial Phase III data for orforglipron showing A1C reduction of 1.3%-1.6% and average weight loss of 16lb. However, LLY faces significant headwinds, including intensifying competition in the burgeoning obesity market (projected $100 billion by 2030) from Novo Nordisk, Amgen, and Viking Therapeutics. Other challenges include declining U.S. net prices, with a mid-to-high single-digit percentage decline expected in 2025, falling sales of Trulicity, and competitor-favoring PBM decisions like CVS Caremark preferencing Wegovy. Despite a 5.6% year-to-date stock increase and outperforming its industry, LLY's forward P/E ratio stands at 31.34, above the industry average of 15.51, though below its own 5-year mean of 34.54. Earnings estimates for 2025 have been revised downwards from $23.49 to $21.95 per share in the past 60 days, with 2026 estimates also seeing a decline.

Key Decisions for Investors

• Investors currently holding LLY may consider retaining their positions, aligning with the article's suggestion, given the company's strong projected revenue growth of 32% for 2025 driven by Mounjaro and Zepbound, and its significant pipeline potential, despite a high forward P/E and recent downward earnings estimate revisions.
• The stock's recent move above its 50-day SMA offers a technical point of interest; long-term investors could note that while the valuation is above the industry, it is below LLY's 5-year mean, which the article suggests might present a buying opportunity.
• Closely monitor upcoming catalysts such as additional Phase III results for orforglipron, the commercial success of ongoing international launches for Mounjaro and Zepbound, approvals for new indications, and the evolving competitive landscape, particularly market share dynamics influenced by PBM formulary choices and pricing pressures in the U.S.