Eli Lilly Stock Dips 6.59% as Updated Forecasts Disappoint Investors

Eli Lilly's shares have experienced a challenging start to 2025, influenced by several recent developments that have impacted investor sentiment. On January 14, the pharmaceutical titant saw its stock decline by 6.59% to $744.91 per share after revealing its full-year 2024 and 2025 financial forecasts. The revelation resulted in a swift evaporation of $500 billion from its market capitalisation.

The decline was largely attributed to the company's updated guidance, which fell short of market expectations. Eli Lilly projected its 2024 revenue at approximately $450 billion, marking a 32% increase yet underperforming the previously estimated $454-460 billion range. The fourth-quarter projections also missed analyst estimates, with anticipated revenues of $135 billion against the forecasted $140 billion.

The shortfall in expectations was linked to the recalibrated forecast for its gastrointestinal drug class, including GLP-1 medications. Eli Lilly's flagship diabetes drug, Mounjaro, saw a fourth-quarter revenue of approximately $35 billion, missing the market's estimated $44 billion. Similarly, the weight management drug, Zepbound, also fell short by generating $19 billion, against the expected $22 billion.

Eli Lilly's CEO, David Ricks, noted that the U.S. GLP-1 market had grown by 45% year-over-year in the fourth quarter of 2024, albeit slower than the company’s initial forecasts. A lower-than-anticipated channel inventory at year’s end also compounded the underperformance. Despite these challenges, Ricks expressed optimism, anticipating sustained growth in Mounjaro and Zepbound sales throughout 2025, with plans to increase production capabilities to boost supply by at least 60% in the first half of the year compared to 2024.

This marks the second consecutive quarter that Eli Lilly has failed to accurately predict the demand for its leading diabetes and weight management drugs. Earlier in 2024, the company had already reduced its fiscal outlook following underwhelming third-quarter results, which led to a significant drop in stock value.

Looking forward, Eli Lilly maintains a positive outlook for 2025, expecting full-year revenue to reach between $580 billion and $610 billion. This represents a growth potential of 32% at midpoint over its 2024 forecast. The company plans to complement this growth by expanding its production of tirzepatide and introducing new medications, such as Jaypirca, Ebglyss, Omvoh, and Kisunla, to the market, which are expected to contribute to future revenue streams.

To unleash further growth potential for tirzepatide, Eli Lilly has initiated several strategic measures, including the launch of smaller dosage forms and production scale expansions. Last August, the company introduced 2.5 mg and 5 mg single-dose vials of Zepbound in the U.S., offering substantial price discounts to enhance accessibility. Additionally, in October, Eli Lilly announced a 15 billion yuan investment to expand production capabilities at its Suzhou plant in China. This expansion is part of the company's significant global capacity upgrade initiative, aimed at fulfilling both domestic and European market demands.