Down Nearly 20%: Should You Buy the Dip on Eli Lilly?

Core Viewpoint - Eli Lilly's stock has experienced a significant decline, falling nearly 20% from its peak, raising questions about whether it represents a buying opportunity [1] Group 1: Reasons for Decline - The primary reason for the decline in Eli Lilly's share price is its failure to meet Wall Street estimates, missing expectations in two out of the last three quarters [2] - The most significant miss occurred in Q3 2024, with earnings approximately 19.5% below consensus estimates, and a more recent miss of around 3.4% [3] - Increased competition in the obesity drug market is also impacting Lilly's stock, with competitors like Novo Nordisk advancing their products [4] Group 2: External Factors - The potential for major tariffs on pharmaceutical imports by the Trump administration poses additional uncertainty for Lilly, with CEO David Ricks acknowledging the negative impact on the company and the industry [5] - The White House is considering international reference pricing for Medicare, which could further complicate pricing strategies for Lilly [5] Group 3: Growth Prospects - Despite current challenges, Lilly's growth prospects remain strong, particularly with booming sales for its tirzepatide products, Mounjaro and Zepbound, which have captured over 50% market share in incretin analogs [7] - Lilly is also advancing other promising obesity drugs, including orforglipron, which is expected to file for approval later this year [8] - The breast cancer drug Verzenio is experiencing solid momentum, with a 10% year-over-year sales increase in Q1, particularly in international markets [9] Group 4: Investment Consideration - Weighing the pros and cons suggests that the balance tips in favor of investing in Eli Lilly, despite the current stock dip [10] - The company is expected to maintain its dominance in the obesity and type 2 diabetes markets while continuing to make progress in oncology and other indications [11]