Eli Lilly’s stock dropped by 10.14% even though the company reported strong earnings for the first quarter. The pharmaceutical company made $12.73 billion, a 45% increase compared to last year.
This growth was mainly due to the success of its diabetes drug Mounjaro and weight loss medication Zepbound. Adjusted earnings per share (EPS) reached $3.34, which was better than analysts’ expectations of $3.10.
The earnings increase came from Mounjaro’s impressive 113% growth in revenue to $3.84 billion and Zepbound’s rise to over $2 billion, more than four times its revenue from last year. Despite these good results, Eli Lilly’s stock price fell to $807.77, down from $898.95.
Key reasons for the stock decline include:
- Revised Profit Forecast: Eli Lilly lowered its profit guidance for the year after facing significant costs related to acquiring an oral cancer treatment from Scorpion Therapeutics. The company now expects adjusted earnings for 2025 to be between $20.78 and $22.28 per share, lower than before.
- Investor Sentiment: Although the company maintained its revenue forecast of $58 billion to $61 billion for 2025, investors were worried about the revised profit forecast and ongoing market instability.
- Manufacturing Investments: Eli Lilly is increasing its investments in manufacturing to keep up with the high demand for Mounjaro and Zepbound. While this is good for the long term, it has made some investors cautious in the short term.
Future Outlook
Eli Lilly has a strong pipeline and has recently seen success in Phase 3 trials, like the positive results for orforglipron, a Type 2 diabetes treatment. The company’s plan to expand its manufacturing capabilities and invest in U.S. production fits well with industry trends.
As Eli Lilly navigates these challenges, how well it executes its plans and manages costs will be key to keeping investor trust and achieving long-term growth. Despite the current decline in stock price, the company’s innovative products and strong pipeline suggest a promising future.