Stock Analysis | Eli Lilly Outlook - Mixed Signals Amid Tariff Uncertainty

1. Market Snapshot

Takeaway: Eli Lilly (LLY) is under technical pressure with a weak score of 3.35, while fundamentals remain strong at 9.4. Investors are advised to monitor for a clearer trend amid ongoing trade tensions.

2. News Highlights

• US-EU Tariff Agreement: A 15% tariff on branded pharmaceutical imports from the EU, announced on July 27, has brought geopolitical risks to Eli Lilly for the first time in decades. This could impact margins and demand for blockbuster drugs like Ozempic and Wegovy.
• Trump’s Tariff Expansion: President Donald Trump has announced a potential 250% tariff on pharmaceutical imports within 18 months, aiming to boost domestic manufacturing. This could increase costs for imported products and potentially affect LLY’s pricing power.
• Lilly Reports Strong Q2 2025 Results: Eli Lilly raised its guidance after reporting second-quarter earnings, showing resilience in its revenue and profit margins despite the challenging external environment.

3. Analyst Views & Fundamentals

The analyst landscape is mixed. The simple average rating is 4.50, while the historical performance-weighted rating is 2.94, showing that analysts with stronger track records are more cautious. This indicates low rating consistency, with a "Strong Buy" from Guggenheim and a "Buy" from Morgan Stanley standing against the recent 21.14% price decline.

Key fundamentals highlight Eli Lilly’s financial strength:

• Annualized Return on Equity: 73.69% – high profitability, with an internal diagnostic score of 3.00.
• Price-to-Sales (PS) Ratio: 71.63 – high valuation, with a score of 3.00.
• Quick Ratio: 1.06 – liquidity is tight, scoring 1.00.
• Net Income to Revenue: 93.74% – high net profitability, with a score of 2.00.
• Income Tax / Total Profit: 20.16% – favorable tax treatment, scoring 0.00.
• Net Profit Margin (NPM): 21.68% – strong margin, with a score of 2.00.
• Inventory Turnover Days: 341.92 days – slow inventory turnover, scoring 2.00.

The strong fundamentals (9.4) align with positive long-term business health, but they contrast with the bearish technical outlook and recent price weakness.

4. Money-Flow Trends

Eli Lilly has seen mixed money flow patterns. Despite a negative overall trend, there is a positive inflow from small investors (52.67%), compared to large and extra-large investors at 47.83% and 44.73%, respectively. The fund-flow score is 7.67 (good), suggesting that small players remain optimistic while big money is cautious.

5. Key Technical Signals

Eli Lilly’s technical outlook is bearish, with an internal diagnostic score of 3.35 and the recommendation to “avoid” for now. Here’s the breakdown:

• Williams %R Overbought: Score of 2.02 – weak signal of overbought conditions with low historical reliability.
• Williams %R Oversold: Score of 7.02 – a strong bullish signal, but conflicting with bearish indicators.
• MACD Death Cross: Score of 1.00 – a clear bearish signal, indicating a potential trend reversal.

Recent chart patterns:

• July 25: WR Overbought signal (bearish).
• July 29: WR Oversold signal (bullish).
• July 30: WR Oversold + MACD Death Cross (mixed signal).
• July 31: WR Oversold signal (bullish).
• August 6: WR Oversold signal (bullish).

Key insight: The market is in a consolidation phase with mixed signals and no clear directional momentum. Investors should be cautious and wait for stronger trend confirmation.

6. Conclusion

Eli Lilly is in a technical slump with conflicting signals and a bearish MACD Death Cross, despite strong fundamentals and positive small investor inflows. The recent trade tensions have added uncertainty, which may weigh on the stock for now. Consider waiting for a pull-back or clearer momentum before initiating a position. Keep a close eye on how the US-EU tariff impacts LLY’s drug pricing and market access in the coming months.