Lilly Gets Lone Sell From HSBC Ahead of Deeper Weight Loss Drug Price Cuts

Eli Lilly & Co. shares dip after HSBC turned bearish on the stock, for the second time in a year, saying investor expectations for weight-loss drugs are over inflated. Analysts led by Rajesh Kumar cut the drugmaker to reduce -- its sole sell-equivalent rating -- from hold and slashed their price target on the stock to $850, the lowest on Wall Street. Wall Street is too optimistic on Lilly as obesity drugmakers compete by lowering drug prices Bloomberg Terminaland rival Novo Nordisk A/S fights to hold onto market share, according to HSBC. "Our analysis of the obesity market suggests that prices, more than product features, are a greater driver of market share," the analysts wrote. "Increasing competition from Novo as it fights to regain its foothold in the market is likely in the near term." All in, the analysts expect global obesity drug revenue to be between $80 billion to $120 billion by 2032, trailing consensus estimates of over $150 billion. "The execution at Lilly has been good so far," the analysts wrote in a note Tuesday, but "the risk of paying up for its bullish world view embedded in the guidance is unattractive." The sell rating is rarity for the Indianapolis-based firm. The stock has has never had more than two sell ratings at the same over the last decade, according to data compiled by Bloomberg. Get the Markets Daily newsletter. Get the Markets Daily newsletter. Get the Markets Daily newsletter. What's happening in stocks, bonds, currencies and commodities right now. What's happening in stocks, bonds, currencies and commodities right now. What's happening in stocks, bonds, currencies and commodities right now. Bloomberg may send me offers and promotions. Plus Signed UpPlus Sign UpPlus Sign Up By submitting my information, I agree to the Privacy Policy and Terms of Service. HSBC had downgradedBloomberg Terminal the stock last April to a sell-equivalent rating, saying the drugmaker's risk-reward "is not attractive" and cited "too much optimism" in Lilly's shares. Four months later, the analysts upgradedBloomberg Terminal the stock to hold, citing potential upside if the obesity market maintains price discipline. This time around, the HSBC analysts say the shares are "priced to perfection" and the risk-reward is no longer balanced. Lilly's shares have skyrocketed, tripling in value over the last four years, as a frenzy for obesity drugs fueled expectations for the drugmaker. That enthusiasm helped the firm to become the first trillion-dollar biopharmaceutical company. US approval of Lilly's obesity pill, expected as early as April, is set to further propel shares. But HSBC analysts see Wall Street estimates of $1.5 billion for Lilly's still experimental oral weight-loss medicine in 2026 as too high. "The compliance and persistence of these drugs might disappoint," analysts said. The stock fell as much as 3.1% Tuesday. Shares of the drugmaker have dropped more than 10% so far this year.

Lilly Gets Lone Sell From HSBC Ahead of Deeper Weight Loss Drug Price Cuts

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