Is Now a Good Time to Buy the Dip in Eli Lilly Stock?

Core View - Eli Lilly's stock has experienced a significant sell-off, nearing its lowest levels in six months, driven by concerns over supply-demand mismatches for its diabetes and obesity drugs, Mounjaro and Zepbound [1][2] - Despite the sell-off, the company is actively addressing supply constraints and has several growth opportunities, including facility upgrades, new distribution channels, and advancements in its clinical pipeline [4][5][12] Financial Performance and Market Reaction - Eli Lilly's stock price has dropped by as much as 14% since its Q3 earnings report on October 30, and is currently trading 6% lower than pre-earnings levels [9] - Investors were dissatisfied with the financial results of Mounjaro and Zepbound, despite both drugs generating multibillion-dollar revenues, due to supply-demand mismatches [2] Supply Chain and Manufacturing - Eli Lilly acquired a manufacturing facility from Nexus Pharmaceuticals earlier this year and is investing an additional 3 billion to address supply-demand challenges for its medications [5] - The company has formed new partnerships, including with Amazon Pharmacy and Ro, to expand access to its weight loss treatments through direct-to-consumer platforms [5] Competitive Landscape - Competitors like Hims & Hers Health are offering compounded versions of weight loss treatments, which are not FDA-approved, taking advantage of Lilly's supply constraints [3] - In a recent study, Eli Lilly's Zepbound demonstrated a 47% greater relative weight loss compared to Novo Nordisk's Wegovy, with Zepbound users experiencing a 20% weight reduction versus 14% for Wegovy users [5] - Novo Nordisk's new GLP-1 product, CagriSema, failed to meet expectations, leading to a 20% drop in Novo's share price, while Lilly's stock gained 5% on the news [5] Growth Opportunities Beyond Weight Loss - Eli Lilly has gained FDA approval for new medications targeting Alzheimer's disease and eczema, with combined total addressable markets exceeding 60 billion [6] - The company is also working on an oral form of its GLP-1 receptor agonist, orforglipron, which has shown positive indicators in clinical trials [12] Shareholder Returns - Eli Lilly announced a $15 billion share buyback program, signaling management's belief that the stock is undervalued [6] Investment Perspective - The current sell-off presents a potential buying opportunity for long-term investors, as the company has made significant progress in addressing supply issues and expanding its product portfolio [13][8]