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On Thursday, BMO Capital Markets adjusted its outlook on Eli Lilly (NYSE:LLY) shares, reducing the price target to $900 from the previous $1,010 while maintaining an Outperform rating on the stock. With a current market capitalization of $758 billion and trading at a P/E ratio of 71.7, InvestingPro analysis suggests the stock is currently overvalued relative to its Fair Value. The adjustment was announced following an analysis of prescription data for Lilly’s products in the incretin market, where it competes with Novo Nordisk (NYSE:NVO).
The analyst at BMO Capital, Evan David Seigerman, noted that Eli Lilly is gaining ground over its competitor, citing a significant increase in prescriptions for its drugs Mounjaro and Zepbound, which saw year-over-year growth of 56% and 310%, respectively. This aligns with the company’s impressive overall revenue growth of 32% in the last twelve months. The positive performance in the incretin market is attributed to Eli Lilly’s investment in manufacturing, commercialization, and its drug pipeline. Despite the lowered price target, the analyst emphasized that the revision does not imply a lack of confidence in Lilly’s incretin portfolio but rather reflects broader macroeconomic pressures affecting the sector. According to InvestingPro, the company maintains a GOOD financial health score, supported by strong cash flows and moderate debt levels.
Seigerman also mentioned adjustments to the forward price-to-earnings (P/E) multiple for 2026, which has been set at 31 times in alignment with current FactSet consensus estimates. Additionally, the analyst slightly reduced sales projections for Mounjaro to $3.91 billion, which is still in line with consensus estimates, and highlighted that Mounjaro is capturing market share from Ozempic, although the quarter-over-quarter growth was not as significant as previously anticipated.
Furthermore, revenue estimates for Zepbound were increased by 4% to $2.2 billion, matching consensus estimates, based on improved prescription dynamics and the removal of compounders. Overall, BMO Capital now estimates that Eli Lilly’s total revenue will reach $12.77 billion, with a diluted non-GAAP EPS of $3.09, which does not take into account recently released IPR&D expenses. These figures are consistent with consensus estimates for revenue but show a discrepancy with the expected consensus EPS of $4.66.
In other recent news, Eli Lilly has reported promising results from its Phase 3 ACHIEVE-1 trial for orforglipron, an oral treatment for type 2 diabetes. The trial demonstrated significant reductions in A1C levels and weight among participants, with the drug meeting its primary endpoint of superior glycemic control compared to placebo. Eli Lilly plans to submit regulatory filings for orforglipron by the end of 2025 for weight management and in 2026 for diabetes treatment. In response to these developments, Leerink Partners reiterated an Outperform rating for Eli Lilly with a price target of $989, while Bernstein analysts set a higher target of $1,100, citing the company’s market share gains and strategic positioning. The pharmaceutical company has also benefited from Pfizer (NYSE:PFE)’s decision to discontinue its obesity drug candidate, danuglipron, which has led to increased investor interest in Eli Lilly. As Pfizer exits this segment, Eli Lilly’s potential to capture a larger share of the GLP-1 receptor agonist market is enhanced. These recent developments indicate continued confidence in Eli Lilly’s growth prospects and product pipeline.
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