Eli Lilly delivered strong second-quarter results, beating Wall Street expectations with a 38% year-over-year revenue increase to $15.56 billion and a 61% surge in adjusted earnings per share to $6.31. However, the company’s experimental daily weight-loss pill orforglipron underperformed in a late-stage trial, causing shares to tumble over 14%. Despite this setback, investors are not fleeing the stock due to Lilly’s strong performance on other fronts, including its popular diabetes and obesity treatments Mounjaro and Zepbound.
Lilly’s revenue growth was driven by healthy margin expansion, with its most important drugs beating expectations. The company also raised its full-year sales outlook to $60 billion-$62 billion, above Wall Street consensus, and adjusted earnings per share to a range of $21.75-$23.00.
However, the disappointing trial results for orforglipron have cast a shadow on Lilly’s stock performance. Investors had high hopes for the drug, which is seen as critical to expanding the market of GLP-1 obesity drugs. The drug did meet primary and secondary benchmarks but fell short of expectations in terms of weight loss.
Lilly CEO David Ricks defended the results, saying the company aimed to create an oral pill that was convenient and scalable. Despite this, Novo Nordisk’s injectable GLP-1 Wegovy remains a benchmark for the industry, and Lilly’s premium valuation makes it challenging to invest in the stock at present.
Analysts have downgraded Lilly shares to “hold-equivalent” rating due to concerns about competition from Novo’s deal with CVS Health. As a result, the author has downgraded Lilly to a 3 rating (sell) and cut their price target to $800 a share from $1,000.
Source: https://www.cnbc.com/2025/08/07/were-downgrading-lilly-and-asking-ourselves-tough-questions-after-its-obesity-pill-letdown.html