Lilly Moves Past 50-Day SMA: Should You Consider Buying the Stock Now?

Eli Lilly's stock has recovered, moving above its 50-day Simple Moving Average, following positive ATTAIN-2 study data for its oral obesity drug orforglipron, which eased earlier investor concerns. The company's growth is primarily driven by strong demand for GLP-1 therapies Mounjaro and Zepbound, accounting for approximately 50% of revenues, with 2025 revenue projected at $60-62 billion. Despite a premium valuation of 26.35x forward earnings, rising consensus estimates and a robust pipeline, including diversification beyond GLP-1s and upcoming regulatory filings for orforglipron, position Lilly for continued expansion amidst intensifying competition in the growing obesity market.

Analysis

Eli Lilly's stock is exhibiting renewed technical strength, having crossed its 50-day Simple Moving Average after an 18% recovery from its post-Q2 decline. This rebound was catalyzed by positive top-line data from the ATTAIN-2 study for its oral obesity drug, orforglipron, which assuaged investor concerns following less impressive ATTAIN-1 results. Fundamentally, the company's growth is anchored by its GLP-1 franchise, with Mounjaro and Zepbound now accounting for approximately 50% of total revenue. Management is aggressively addressing prior supply constraints, projecting a 1.8x increase in salable incretin doses in H2 2025 versus the prior year, underpinning a robust 2025 revenue forecast of $60 to $62 billion, implying over 30% year-over-year growth. While the stock trades at a premium forward P/E of 26.35x compared to the industry's 14.79x, this is below its own 5-year average of 34.54x and is supported by rising consensus EPS estimates. The company is also strategically diversifying through M&A and advancing a broad pipeline, including a planned regulatory filing for orforglipron this year, positioning it to compete in a market projected to reach $100 billion despite intensifying pressure from rivals like Novo Nordisk, Amgen, and Viking Therapeutics.

Key Decisions for Investors

• Given the strong momentum in the core GLP-1 franchise, resolution of production constraints, and positive technical indicators, investors could consider the current valuation an attractive entry point for a long-term holding, as it trades below its 5-year average P/E.
• Monitor key near-term catalysts which will dictate competitive positioning, specifically the regulatory filing for oral orforglipron later this year and the FDA's Q4 decision on Novo Nordisk’s competing oral formulation.
• Despite the bullish outlook, the premium valuation makes the stock sensitive to execution risk; therefore, closely track Lilly's ability to meet its aggressive production targets and achieve its >30% revenue growth guidance for 2025.
• Recognize the company's recent M&A deals as a strategic effort to de-risk its portfolio by diversifying revenue streams beyond the highly competitive GLP-1 market, which adds long-term value.