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Investing.com -- HSBC upgraded Eli Lilly to Hold from Reduce, saying its bear case has now run its course and the risk-reward profile looks more balanced.
The bank lifted its target price on the stock to $700 from $675, implying a 4.9% downside from Tuesday’s close.
HSBC analysts said the change reflects stronger near-term estimates and greater clarity around the commercial potential of orforglipron, Lilly’s oral GLP-1 candidate.
The ATTAIN-2 Phase 3 trial in diabesity showed competitive efficacy against Novo Nordisk’s Rybelsus, with similar improvements in A1c and numerically stronger weight loss at higher doses, although discontinuation rates were higher.
A team led by Rajesh Kumar noted that the trial suggests “a potential for optimal dose titration in real world practice.”
Consensus forecasts for orforglipron have also adjusted lower following the disappointing ATTAIN-1 readout earlier this month, with 2032 revenue expectations now at $15.5 billion compared with $20 billion in June.
HSBC maintains peak sales closer to $10 billion but said market expectations are “more sensible now.”
On pricing, HSBC said Lilly’s decision to increase prices outside the U.S. signals discipline in a market where investors fear annual declines of more than 5%.
“If Novo reciprocates, we see potential for TAM for the GLP1 market to meet current consensus expectations,” the analysts wrote. That pricing backdrop, along with stabilizing expectations, helps explain the upgrade.
HSBC’s updated forecasts call for revenue of $60.5 billion this year, rising to $80 billion by 2027, with earnings per share climbing from $22.03 in 2025 to $32.76 in 2027.
While still below consensus, the analysts said there is upside risk if pricing pressure is well managed and if orforglipron launches more strongly than anticipated.
“The bear case has played out and there may be upside potential to consensus estimates if the obesity market maintains price discipline,” analysts said, while cautioning that downside risks include aggressive competitor pricing and more restrictive labels for orforglipron.