Lilly Down 17% Since Q1 Results: Should You Buy the Dip in LLY Stock?

Core Viewpoint - Eli Lilly and Company has experienced a significant stock decline of 17% in May, attributed to mixed earnings results and competitive pressures in the obesity market, particularly from CVS Caremark's partnership with Novo Nordisk [1][3][30] Financial Performance - Lilly reported mixed earnings on May 1, missing first-quarter earnings estimates but exceeding sales expectations, with key drugs Mounjaro, Zepbound, Jardiance, and Taltz performing well [1][2] - Mounjaro and Zepbound generated combined sales of $6.15 billion in Q1 2025, accounting for approximately 48% of total revenues [6][30] - Despite better-than-expected sales, Lilly's stock fell 11% on the earnings announcement day due to the earnings miss and lowered EPS guidance [2][30] Product Performance - Sales of Mounjaro and Zepbound have shown strong growth, with Mounjaro leading in new prescriptions for type II diabetes and Zepbound holding a 60% market share in the anti-obesity market [8][9] - Lilly's new drugs, including Omvoh, Jaypirca, Ebglyss, and Kisunla, are contributing to top-line growth alongside Mounjaro and Zepbound [12][13] Market Dynamics - The obesity market is projected to reach $100 billion by 2030, with increasing competition from companies like Amgen and Viking Therapeutics developing GLP-1-based therapies [16][18] - CVS Caremark's partnership with Novo Nordisk to promote Wegovy as its preferred GLP-1 therapy has raised concerns about market share for Lilly's Zepbound [3][28] Future Outlook - Lilly maintains its sales guidance for 2025, expecting revenues between $58.0 billion and $61.0 billion, reflecting a 32% year-over-year growth driven by Mounjaro and Zepbound [30] - The company is investing in expanding its pipeline, with several new drugs in development and plans for regulatory filings for orforglipron by the end of 2025 [14][15] Stock Valuation - Lilly's stock has underperformed the industry, declining 3.2% year-to-date compared to the industry's 2.4% decrease [19] - Estimates for Lilly's 2025 earnings have decreased from $23.49 to $22.20 per share over the past month, indicating a downward trend in earnings expectations [24][30]