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Lilly Loses Around $14B This Week: How to Play LLY Stock
LLYLilly(LLY) ZACKS·2024-10-17 20:01

Core Viewpoint - Eli Lilly and Company (LLY) has experienced a decline in stock value due to recent FDA decisions regarding its GLP-1 drug tirzepatide, despite the company's strong performance and growth prospects in the pharmaceutical market [1][2][3]. Group 1: Stock Performance and Market Impact - LLY's stock has declined 1.7% this week, resulting in a loss of nearly 14billioninmarketvalue[1].−TheFDA′srecentdecisiontoreviewtheremovaloftirzepatidefromitsshortagelisthasnegativelyimpactedLLY′sshares[2][3].−Despitethissetback,LLY′sstockhasrisen57.314 billion in market value [1]. - The FDA's recent decision to review the removal of tirzepatide from its shortage list has negatively impacted LLY's shares [2][3]. - Despite this setback, LLY's stock has risen 57.3% this year, outperforming the Large Cap Pharmaceutical industry and the S&P 500 [8]. Group 2: Product Portfolio and Pipeline - Tirzepatide, marketed as Mounjaro and Zepbound, has become a key revenue driver, generating approximately 6.7 billion in sales in the first half of 2024, accounting for around 44% of total revenues [4]. - LLY has invested over 18billionsince2020toenhancemanufacturingcapabilities,whichisnowbenefitingthesupplyofitsdrugs[4].−Thecompanyhasreceivedapprovalsforseveralnewdrugs,includingKisunlaforAlzheimer′sdisease,whichisexpectedtogeneratesignificantsales[6][7].Group3:CompetitiveLandscape−LLY′stirzepatidefacescompetitionfromNovoNordisk′ssemaglutide,whichisalsoinhighdemandbutremainsinshortsupply[5].−Thecompanyisdevelopingtirzepatideforadditionalindications,whichcouldfurtherenhanceitsmarketposition[5].Group4:FinancialOutlook−EarningsestimatesforLLYhavedecreasedfrom18 billion since 2020 to enhance manufacturing capabilities, which is now benefiting the supply of its drugs [4]. - The company has received approvals for several new drugs, including Kisunla for Alzheimer's disease, which is expected to generate significant sales [6][7]. Group 3: Competitive Landscape - LLY's tirzepatide faces competition from Novo Nordisk's semaglutide, which is also in high demand but remains in short supply [5]. - The company is developing tirzepatide for additional indications, which could further enhance its market position [5]. Group 4: Financial Outlook - Earnings estimates for LLY have decreased from 16.49 to 14.41persharefor2024,attributedtoacquisition−relatedcosts,whileestimatesfor2025haveincreasedfrom14.41 per share for 2024, attributed to acquisition-related costs, while estimates for 2025 have increased from 22.79 to $24.16 per share [9][10]. - LLY's strong revenue growth is driven by the demand for its key products, which is expected to offset declines from other drugs [11][12].