Leerink Reaffirms Confidence in Eli Lilly Despite Slow Mounjaro and Zepbound Sales

Eli Lilly has adjusted its revenue projections for the fourth quarter of 2024, revising the expected revenue to $13.5 billion. This figure is $400 million less than the company initially projected, a change largely attributed to lower-than-expected sales for two of its key products, Mounjaro and Zepbound.

Despite the dip in revenue projections, Leerink has reiterated an Outperform rating on Eli Lilly's stock (NYSE: LLY), signalling a bullish stance on the pharmaceutical giant's future in light of its latest financial guidance and the expected trajectory for key products.

The company reported a 32% revenue growth in 2024. While this is a significant increase, it still falls below their expectations for the year. The CEO, David Ricks, highlighted the underperformance of tirzepatide, marketed as Mounjaro for type 2 diabetes and Zepbound for obesity, as a primary factor in the revised revenue estimates. For the fourth quarter, Eli Lilly anticipated sales of $3.5 billion for Mounjaro and $1.9 billion for Zepbound.

Several factors contributed to the slower sales. Changes in Medicare Part D and insurance requirements negatively affected prescription numbers, particularly impacting December sales. Additionally, the company faced lower stock levels of these products as the year ended, limiting their availability.

Despite these challenges, Eli Lilly continues to explore the potential of tirzepatide beyond its current applications. There is ongoing research into its effectiveness for other conditions, such as cardiovascular diseases and fatty liver disease, known as steatohepatitis (MASH). The FDA’s recent approval of Zepbound for obstructive sleep apnea signifies progress in these expansion efforts.

Looking ahead, there is optimism about Eli Lilly's prospects. Analyst David Risinger from Leerink Partners expressed confidence in the company’s 2025 financial performance and pipeline developments, particularly with expected Phase 3 trial results for orforglipron, an oral GLP-1 drug.

Leerink's endorsement stems from a belief in Eli Lilly's potential for robust financial performance beyond 2025, as well as anticipated positive developments in the firm’s product pipeline. This optimistic perspective is also fueled by the belief that these elements will offset the disappointing results witnessed for the second consecutive quarter and will propel future growth.

Analysts have set a mean price target of $984.05 for the stock, sustaining a bullish consensus with a recommendation mean of 1.75, denoting a “buy” sentiment among market observers. The firm's comprehensive product offerings and a future promise reflected in its pipeline and strategic initiatives underpin Leerink's Outperform rating and forecast investing sentiment.

Eli Lilly’s management remains positive about the potential market opportunities, despite the current setback in their revenue projections. The company's strategic focus on expanding the application of its products could shape its future performance positively.