The stock of Eli Lilly (LLY) is rising on news that its chief rival Novo Nordisk (NVO) has lowered its forward guidance on the back of weak sales for its weight loss medication.
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Generic and compounded versions of Novo Nordisk’s weight loss drug Wegovy impacted sales and led the Danish pharmaceutical company to cut its full-year guidance. The drug maker now expects sales growth of 13% to 21% this year, down from a previous growth estimate of 16% to 24%. Novo Nordisk also cut guidance for its operating-profit in 2025.
“We have reduced our full-year outlook due to lower-than-planned branded GLP-1 penetration, which is impacted by the rapid expansion of compounding in the U.S.,” said Novo Nordisk CEO Lars Fruergaard Jørgensen in the company’s earnings release.
Good News for LLY Stock
Novo Nordisk is Eli Lilly’s main rival in the red hot market for weight loss drugs. In fact, the two companies hold a virtual duopoly over the global market for weight loss drugs. Eli Lilly’s weight loss medicine Zepbound competes directly against Novo Nordisk’s Wegovy treatment.
News that Novo Nordisk has reduced its guidance, and that it sales have been hurt by knock-off versions of Wegovy, has LLY stock trading up about 1% on May 7. The two stocks have been diverging in recent months. While Eli Lilly’s share price is basically flat on the year, NVO stock has fallen 21%.
Is LLY Stock a Buy?
The stock of Eli Lilly has a consensus Strong Buy recommendation among 19 Wall Street analysts. That rating is based on 18 Buy and one Sell recommendations issued in the last 12 months. The average LLY price target of $981 implies 25.45% upside from current levels.
