What Happened?
Shares of global pharmaceutical company Eli Lilly (NYSE: LLY) fell 4.3% in the morning session after its key competitor in the weight-loss drug market, Novo Nordisk, lowered its sales and profit growth forecasts for 2025. The lowered guidance from the Danish pharmaceutical giant cast a shadow over the high-growth weight-loss drug sector. This was the second time this year Novo Nordisk had reduced its outlook, which amplified investor concerns about the market's future performance. Compounding the issue, Eli Lilly also faced headwinds as CVS Caremark implemented coverage restrictions on its popular weight-loss drug, Zepbound, in response to surging demand. The combination of a major competitor's weakened forecast and specific access challenges for one of Lilly's key products appeared to prompt the sell-off.
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What Is The Market Telling Us
Eli Lilly’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 15.3% on the news that results from a Phase 3 trial showed that its experimental drug, Orforglipron, performed significantly well in helping patients manage obesity and diabetes. The stock's reaction suggested that investors were optimistic that, if approved, Lilly could scale production quickly and tap into the fast-growing diabetes and obesity markets.
Eli Lilly is down 0.8% since the beginning of the year, and at $771.95 per share, it is trading 19.6% below its 52-week high of $960.02 from August 2024. Investors who bought $1,000 worth of Eli Lilly’s shares 5 years ago would now be looking at an investment worth $4,772.
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