Lilly Down More Than 15% in a Year: Time to Buy, Sell or Hold?

Eli Lilly (LLY) stock declined 15.7% over the past year, primarily due to an earnings miss and rival Novo Nordisk's momentum, despite Mounjaro and Zepbound now comprising 48% of revenues and driving growth via international launches and improved supply. While facing intense competition in the expanding obesity market and U.S. pricing pressures, LLY forecasts robust 32% revenue growth to $58B-$61B in 2025, underpinned by its strong GLP-1 franchise, new drug approvals, and pipeline diversification, though the stock trades at an elevated forward P/E.

Analysis

Despite a 15.7% stock decline over the past year attributed to a first-quarter earnings miss and competitive pressures, Eli Lilly's fundamentals are anchored by its GLP-1 franchise. Mounjaro and Zepbound now account for 48% of total revenues, with sales growth rebounding in Q1 2025 due to improved supply and new international launches in markets like China, India, and Mexico. The company's growth outlook is further supported by a portfolio of newly approved drugs (Omvoh, Jaypirca, Kisunla) and a robust pipeline featuring next-generation obesity candidates and diversification into oncology and neuroscience through recent M&A. However, significant headwinds persist, including intensifying competition in the obesity market from Novo Nordisk, Amgen, and Viking Therapeutics, alongside persistent U.S. net pricing pressure, with a mid-to-high single-digit price decline anticipated in 2025. While the stock's forward P/E ratio of 29.54 is elevated compared to the industry average of 15.04, it remains below its five-year mean, and the company projects strong 2025 revenue growth of 32% to a range of $58.0 to $61.0 billion.

Key Decisions for Investors

• Investors should weigh the recent 15.7% stock price decline against the company's strong 32% revenue growth forecast for 2025, driven by the dominance of its Mounjaro and Zepbound franchise.
• Monitor competitive developments closely, particularly clinical trial progress from Amgen (MariTide) and Viking Therapeutics (VK2735), as their entry could disrupt the GLP-1 market currently dominated by Lilly and Novo Nordisk.
• Pay close attention to upcoming catalysts, including the cardiovascular outcomes trial data for tirzepatide and the execution of international commercial launches, as these are critical for sustaining momentum and justifying the premium valuation.
• Factor in the persistent headwind of U.S. net price erosion, as the expected mid-to-high single-digit decline in 2025 could impact margin expansion despite strong top-line growth.