LLY Shares Dive On Analyst Downgrade Citing Obesity Market Overestimation Concerns, But Retail Dismisses ‘Absurd’ Selloff

The analyst’s new price target represents a potential downside of about 14% from the stock’s last closing price on Monday.

• The analyst now thinks that expectations for obesity drugs’ total addressable market are elevated at over $150 billion.
• While the oral obesity pill launch might expand access to anti-obesity medications, the "compliance and persistence of these drugs might disappoint," HSBC added.
• Lilly’s application for approval of its oral obesity pill orforglipron is currently under review by the U.S. Food and Drug Administration.

Shares of Eli Lilly and Company (LLY) dived 6% on Tuesday after HSBC analyst Rajesh Kumar downgraded Eli Lilly to ‘Reduce’ from ‘Hold’ while raising doubts about expectations for obesity drugs’ total addressable market.

Kumar lowered the price target on LLY to $850, down from $1,070. The new price target represents a potential downside of about 14% from the stock’s last closing price on Monday.

Kumar’s Take

The analyst now thinks that expectations for obesity drugs’ total addressable market are elevated at over $150 billion. The market is likely to be $80 billion-$120 billion by 2032, and price competition "is likely to be significant," the analyst told investors in a research note, as per TheFly.

HSBC says Eli Lilly's obesity price cuts in 2026 are a headwind while its guidance implies that it can continue to "defy gravity with volume growth." While the oral obesity pill launch might expand access to anti-obesity medications, the "compliance and persistence of these drugs might disappoint," HSBC added. It thinks oral drug launch expectations for Lilly are too high.

Lilly’s Oral Obesity Pill

Oral obesity pills are expected to be the next major innovation in the obesity market, doing away with needles and offering customers more flexibility and ease. Lilly’s application for approval of its oral obesity pill orforglipron is currently under review by the U.S. Food and Drug Administration. The company expects a decision by April and launch afterwards.  

The FDA approved Lilly’s rival Novo Nordisk’s oral obesity pill called Wegovy in December. Novo launched it to commendable reception in January, giving the Danish drugmaker a solid head start against its American competitor.

Further, Lilly's pill helped patients lose only 12.4% of their body weight in a late-stage study while Novo's pill led to up to 16.6% reduction in weight in a separate trial.

Launch Timeline

“Orforglipron is front and center. We are well on track for regulatory approval…we are expecting that early Q2…we are prepared for a full commercial implementation and launch in the U.S.,” Lilly executive Lucas Montarce said in a conference earlier this month. “After the FDA approvals, it depends on the dates and so on, but takes within a week or so to see the product shipping to the patients, to the customers and the patients then afterwards.”

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around LLY stock rose from ‘bearish’ to ‘bullish’ territory over the past 24 hours, while message volume rose from ‘low’ to ‘normal’ levels.

A Stocktwits user termed today's selloff as an “absurd reaction,” voicing hopes for the stock rallying to $1300 by end of year.  

Another voiced optimism for an imminent approval for Orforglipron.

LLY stock has gained 12% over the past 12 months. 

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