Eli Lilly’s (LLY) stock price peaked in October 2023 but has since declined by more than 21% as of January 16. But is this a buying opportunity? Let’s break down the reasons behind the recent downturn and whether it’s a good time to invest.
The latest decline was triggered by management’s presentation at the JPMorgan Healthcare conference, where CEO David Ricks announced $45 billion in sales for 2024, which is lower than previous expectations. However, there are some positive signs that suggest Eli Lilly’s stock could be due for a rebound.
Firstly, sales of the company’s diabetes and weight loss treatments, particularly tirzepatide (Zepbound), have been soaring with combined sales of $5.4 billion in the fourth quarter. This growth is expected to continue, driven by the approval of new products such as Zepbound for obstructive sleep apnea and Omvoh for Crohn’s disease.
Additionally, Eli Lilly has a strong pipeline of drugs in development, including orforglipron, which could further boost sales. The company expects approval of this oral weight-loss pill in early 2026, with potential sales growth expected to be substantial.
Considering these factors, some analysts believe that Eli Lilly’s valuation is reasonable, given the potential for double-digit annual growth over the next several years. With forward-looking earnings expectations, you can buy shares for about 33.5 times, which is a bargain considering the company’s strong pipeline and growth prospects.
Overall, while there are concerns about management’s revised sales guidance, Eli Lilly’s strong pipeline and growth prospects make it an attractive stock to consider buying on the dip. However, investors should also consider alternative investment options and do their own research before making any investment decisions.
Source: https://finance.yahoo.com/news/eli-lilly-missed-sales-expectations-092200397.html?guccounter=1