Lilly shares on track for worst day after beating Zeppbound sales forecast from 2021

By Bhanvi Satija and Patrick Wingrove

(Reuters) – Shares of Eli Lilly fell 8 percent on Tuesday in the fourth quarter of weight-loss drug Zepbod after Wall Street beat forecast sales.

The company’s shares were trading at $739.23, their worst one-day decline in four years. Shares in Copenhagen-listed rival Novo Nordisk also fell 3.5 percent.

Lilly’s stock went on a tear in early 2023, with the company’s shares doubling as investors bet on the drug’s popularity. The stock stumbled in October last year after disappointing sales of ZipBoard and has since been bought.

BMO Capital Markets analyst Evan Seigerman said the forecast may come as a shock to investors, but could still shake some confidence in demand, citing Zepbod’s pharmaceutical division.

Lilly said on Tuesday that the market for accelerators is expected to grow rapidly based on the performance of previous quarters.

With supply normalizing, Lilly’s chief financial officer, Lucas Montarce, said wholesalers were not looking to build up their incretin stocks as much as before, including Zeppod, at the end of the year.

“This year, all sizes are available … That (trend) has not succeeded. We ended up with the same level of inventory in the channel that we had in the third quarter.”

Lilly expects $3.5 billion in fourth-quarter sales of Monjaro, and $1.9 billion for Zepbound. Analysts had expected the drugs to bring in $5.35 billion and $2.08 billion, respectively, according to data compiled by LSEG.

In October, Lilly posted third-quarter sales of its two drugs below analysts’ estimates, blaming physical and cash shortages at wholesalers and prompting some concerns about slowing demand.

Bernstein analyst Courtney Breen said Tuesday’s fall forecasts show the company needs to take steps to stimulate more demand.

Lilly revised its forecast for 2025 sales between $58 billion and $61 billion. The midpoint was above analysts’ estimates of $58.52 billion, driven by Monjaro’s launch in new markets.

Launching the drug for both obesity and type-2 diabetes in China, India, Brazil and Mexico was on the company’s “to-do list for 2025,” Montarce said, without giving further details on when the drug would be launched in each country.

Lilly’s trailing 12-month price-to-earnings ratio, a common measure for valuing stocks, stood at 34.59, compared with peers Merck & Co and Pfizer’s 10.72 and 9.07, respectively.

(Reporting by Bhanvi Satija in Bengaluru and Patrick Wingrove in San Francisco; Editing by Shonak Dasgupta)