Is Eli Lilly a Buy? Analyst Confidence Grows for 2025

Key Points

• Eli Lilly's price pullback presents investors with an opportunity. The stock has a healthy 25% upside from critical support targets. 
• Despite tepid results, analysts' consensus is firming around the $1000 level; the outlook and pipeline are robust. 
• Ebglyss approval in Q3 will sustain the company's growth trajectory in 2025. 

Eli Lilly’s NYSE: LLY market isn’t out of the weeds yet but will rebound strongly in 2025. The Q3 results failed to spark a rally because of underperformance, but the salient details are that growth is robust, driving impressive profits, and is expected to accelerate in 2025. The net result from the release is that analysts are raising their estimates for Q4, next year, and the next five year’s earnings, creating a tailwind for the LLY market.  

Competition in Eli Lilly's core market is intense and likely to be a headwind over the coming years, but operational quality must be considered. Eli Lilly is following AbbVie's NYSE: ABBV lead and investing in diversification, which is fueling a robust outlook for sustainable long-term growth. Among the highlights from Q3 is completing an acquisition that bolstered the neurosciences portfolio and the pipeline of potential candidates. 

Regarding the pipeline, the company received two new approvals during the quarter and announced positive results from four last-stage trials that could receive approval within the next 12 to 18 months. One of the approvals is for Ebglyss, a treatment for atopic dermatitis that could displace the current market leader, Dupixent. Dupixent sales in Q3 topped $3.8 billion, or roughly 27% of Eli Lilly’s projected Q4 revenue. 

Eli Lilly Falls After Missing High Bar: Issues Weak Full-Year Guidance

The only problem with Eli Lilly’s Q3 report is that it failed to match the high bar set by analysts. The company’s revenue missed the consensus by 560 basis points but is up 20.5% compared to last year despite divestiture on the strength of Mounjaro and Zepbound, portfolio diversification, and higher prices. 

Eli Lilly’s growth is stronger on an adjusted basis, about 42% YoY, and is expected to accelerate in Q4. The non-incretin portfolio, a critical element of the company’s long-term outlook, grew by 17% and will accelerate in Q4 due to the latest acquisition. Morphic Holding is focused on inflammatory bowel disease, a market worth roughly $22 billion, and is expected to grow at a mid-single-digit CAGR over the next eight years. 

The margin news is also mixed but favorable to investors. Although earnings fell short of the consensus, the net income is positive versus a loss in the previous year, and adjusted EPS is up by 1000%. Regarding the guidance, the company trimmed its outlook for revenue and earnings due to acquired IPR&D expenses. However, the new guidance was better than expected, forecasting $14.20 billion in revenue for Q4, up more than 50% as Mounjaro and Zepbound sales accelerate and the divestiture impact disappears. 

Analysts Conviction Firms: Eli Lilly Will Set a New High

The first analyst revisions tracked by MarketBeat include reduced price targets, but the takeaway from the data is positive for shareholders. The reductions are weighing on the market now but show an increasing conviction in the $1009 consensus target, a 25% increase from critical support levels. The two revisions tracked within the first 72 hours of the release put the stock at $975 and $1100, providing a mid-point above the consensus, suggesting even higher highs are possible. 

The technical action in LLY shares following the report is mixed. The market fell hard on the news but bounced from the critical support target and remains above it now. The volume indicates support strength, which spiked to a six-year high. The market may retest support at the $800 level but should stimulate another buying frenzy if it does. 

The biggest risk is competition in the growing GLP-1 marketplace. The latest news is that Viking Therapeutics' VK2735 compound, similar to Lilly’s Zepbound, showed positive results in an early trial with increased weight loss as the dosage increased. Among the advantages is its oral delivery, contrary to injectable Zepbound.