Did Eli Lilly Stock Just Have Its Novo Nordisk Moment?

Eli Lilly makes the popular drugs Mounjaro and Zepbound for diabetes and weight loss. (Daniel Acker/Bloomberg)

Some would say Eli Lilly just had its Novo Nordisk moment.

Analysts mostly agree that the selloff in Lilly shares after the company released disappointing data on its experimental weight-loss pill was overdone. Nonetheless, many analyst trimmed their price targets on shares.

Lilly’s pill for weight loss, orforglipron, showed that patients on average lost 12.4% of their weight over 72 weeks, slightly lower than the 13% to 15% many analysts had predicted. Lilly shares tumbled 14% Thursday and were extending losses in Friday trading, down another 1.9% to $629.65.

Following Lilly’s data readout Thursday, Jefferies analyst Akash Tewari lowered his peak sales estimate of orforglipron to $25 billion from $42 billion. He lowered the price target on shares to $905 from $1,057 and maintained a Buy rating.

However, Lilly’s pain was Novo and other weight-loss drugmakers’ gain.

“We’re not throwing in the towel on the asset [orforglipron], but concede that 25 mg oral sema (aka the Wegovy Pill), is likely to take more share in the oral weight loss market,” wrote BMO Capital Markets analysts led by Evan Seigerman early Friday. Novo’s data suggests that Wegovy in a pill leads to an average weight reduction of 16.6%.

Seigerman maintained an Outperform rating on shares but lowered his target price to $840 from $920, citing lower expected peak sales for orforglipron. “Taking a step back, our view that Lilly’s injectable franchise is best-in-class (and unlikely to change anytime soon) gives us some comfort that the stock is oversold,” he added.

A similar narrative emerged for Novo in December when its experimental injectable CargiSema showed a weight-loss effect of 22.7% instead of the expected 25%, sending shares crashing. At the time, many analysts, including Seigerman, called the selloff overdone.

Things have only gotten worse for Novo stock, which has fallen another 40% since Dec. 21 amid competition from both Lilly and knockoff versions of semaglutide, the active ingredient in Ozempic and Wegovy.

Whether this is Lilly’s Novo moment isn’t known yet. But investors might want to keep Novo in mind when evaluating analysts’ calls today. Pharma is a volatile business, and the weight-loss market has surprised before.

Write to Elsa Ohlen at elsa.ohlen@barrons.com