Shares of Eli Lilly (LLY) are down 2% after its archrival Novo Nordisk (NVO) reported disappointing financial results for this year’s second quarter.
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NVO stock is down 4% after the European pharmaceutical giant delivered a Q2 print that underwhelmed investors and analysts. Novo Nordisk had pre-announced its latest financial results and previously lowered its guidance. The earnings announced on Aug. 6 merely confirmed the preannouncement.
Still, Novo Nordisk said that it is scaling back its drug pipeline as its weight-loss medication Wegovy continues to lose market share to Eli Lilly’s rival Zepbound obesity drug. Specifically, Novo Nordisk said that it is halting development of several experimental treatments, including an early-stage weight-loss drug that works similarly to Eli Lilly’s Zepbound.
Novo Nordisk also said it has stopped development of an early-stage weight-loss pill called INV-347, and a mid-stage treatment for liver failure called Zalfermin.
Shifting Fortunes
Sales of Novo Nordisk’s Wegovy weight-loss drug totaled $3 billion in the second quarter, only slightly above Wall Street estimates. Sales have begun to ease as consumer enthusiasm for weight-loss treatments cools. Some analysts say that a bubble in the obesity drug market has begun to burst, dragging down NVO and LLY stocks.
Management at Novo Nordisk has blamed the tepid financial results and lowered guidance on compounded knockoff versions of Wegovy in the U.S. However, it is clear that the company is losing ground to Eli Lilly, whose Zepbound medication continues to gain market share. Eli Lilly is scheduled to report its Q2 financial results on Aug. 7.
Is LLY Stock a Buy?
The stock of Eli Lilly has a consensus Strong Buy rating among 19 Wall Street analysts. That rating is based on 17 Buy and two Hold recommendations issued in the last 12 months. The average LLY price target of $1,028.80 implies 34.89% upside from current levels.
