Eli Lilly Stock Slides on EPS Guidance—A Buying Opportunity or a Valuation Reset?

Published 02/05/2025, 06:57
Updated 02/05/2025, 08:34

Eli Lilly’s (NYSE:LLY) stock faced a notable decline following the company’s announcement of a reduced profit forecast, despite delivering first-quarter results that surpassed Wall Street expectations.

The pharmaceutical giant reported an adjusted earnings per share (EPS) of $3.34 on revenues amounting to $12.73 billion, both figures exceeding the anticipated EPS of $3.25 and revenue of $12.62 billion. Strong sales of weight-loss medications, Mounjaro and Zepbound, contributed to the robust financial performance, with Mounjaro’s sales surpassing projections.

However, the company adjusted its full-year EPS forecast downwards due to net losses on investments in equity securities and charges related to acquired in-process research and development, totaling $1.57 billion in the first quarter. Despite maintaining its revenue guidance, the adjusted EPS is now estimated between $20.78 to $22.28, a reduction from the previous range. Following the announcement, Eli Lilly’s shares, which had seen a rise of over 16% this year, dropped by more than 7%.

Eli Lilly’s First-Quarter Shows Impressive Sales, Full-Year EPS Forecast Revised Downward

Eli Lilly’s first-quarter financial performance was marked by impressive sales figures that exceeded market expectations. The company reported an adjusted EPS of $3.34, surpassing the projected $3.25, and a revenue of $12.73 billion, outdoing the anticipated $12.62 billion.

A significant contributor to these results was the strong demand for its weight-loss medications, Mounjaro and Zepbound, with Mounjaro’s sales notably outperforming forecasts. Despite these positive outcomes, the company revised its full-year EPS forecast downward due to substantial net losses on investments in equity securities and charges related to acquired in-process research and development, totaling $1.57 billion.

This adjustment has led to a revised EPS projection of $20.78 to $22.28, down from the previous estimates.

LLY Stock Brief

The announcement of a reduced profit forecast had an immediate impact on Eli Lilly’s stock price, which saw a significant drop. On May 1, 2025, the stock opened at $844.00, down from the previous close of $898.95, and continued to decrease, reaching a low of $825.00. By 11:02 EDT, the stock was trading at $830.44. This decline follows a period of growth where the stock had risen over 16% earlier in the year.

Despite the drop, the company’s market capitalization remains robust at $745.73 billion. Key financial metrics such as a trailing P/E ratio of 71.0385 and a forward P/E ratio of 36.64784 reflect investor confidence in the company’s long-term potential, though short-term challenges have affected current valuations.

Analysts maintain a ‘Buy’ recommendation, with a target mean price of $991.9726, suggesting optimism about future stock performance.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

This article was originally published on The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.

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