Eli Lilly selloff on CVS Wegovy news overdone, says JPMorgan

JPMorgan attributes the post-earnings selloff in Eli Lilly (LLY) to a mix of positioning coupled with fears over broader class pricing pressure for GLP-1s following CVS Health’s (CVS) decision to move Wegovy to its preferred agent on formulary. However, JPMorgan does not see the CVS announcement as portending an acceleration in price declines across the space. The firm notes that Street estimates already assume steady price erosion for the category unlocking access for the category over time. Further, it expects the CVS update will likely impact only a small portion of Eli Lilly’s Zepbound business and expects Lilly to continue to see share gains relative to Wegovy in the broader obesity space as well as growth for the obesity market to remain healthy as a whole. As such, the analyst views the selloff on the news as overdone. JPMorgan keeps an Overweight rating on Lilly with a $1,100 price target.