Eli Lilly Shares Under Pressure as Weight-Loss Drug Competition Intensifies

Eli Lilly & Co. faced significant market pressure this week following a strategic pricing move by its key competitor. On Monday, Danish pharmaceutical firm Novo Nordisk launched an aggressive campaign for its oral weight-loss medication, Wegovy, in the United States, setting a monthly price of $149. The immediate consequence was a sharp 3.6% drop in Eli Lilly's share value within hours, a decline that occurred against a backdrop of broader market gains. This development places Eli Lilly in a challenging position, as its own competing oral treatment has not yet received regulatory approval.

Adding to the negative sentiment, a lawsuit filed by the Attorney General of Indiana alleges the company manipulated insulin prices. This legal uncertainty provided additional impetus for short-sellers and contributed to the downward pressure on the stock. During the trading session, Eli Lilly's shares temporarily fell to $1,033, with trading volume nearly double the average.

Novo Nordisk Seeks Early Advantage in Oral Drug Segment

Novo Nordisk's strategy appears focused on capturing early market share. By introducing a low 1.5-milligram starter dose at the $149 monthly price point, the company is targeting consumers who pay out-of-pocket. Eli Lilly's comparable drug, Orforglipron, remains under review by the U.S. Food and Drug Administration (FDA), with approval not anticipated until the second quarter of 2026 at the earliest. Market experts worry that this timeline gives Novo Nordisk a substantial window to secure a dominant position in the lucrative oral obesity medication market.

Should investors sell immediately? Or is it worth buying Eli Lilly?

Analyst Outlook Remains Positive Despite Setback

Despite the stock's reaction, some analysts maintain a bullish long-term view. Leerink Partners has reaffirmed its positive stance and even raised its price target for Eli Lilly from $1,104 to $1,234, implying an 18% upside potential. The investment bank's optimism is based on a 2027 revenue projection of $94.3 billion, which is 6% above the current market consensus. Furthermore, Phase 3 trial results for another of Eli Lilly's obesity drug candidates, Retatrutide, expected in Q2 2026, could provide a fresh catalyst for the stock.

However, the valuation remains demanding. Trading at a forward price-to-earnings (P/E) ratio of 32.15, Eli Lilly commands a significant premium compared to the industry average of 14.5. This pricing reflects high growth expectations, which the company must now deliver on.

Upcoming Quarterly Report to Provide Further Direction

The company's next major test will be its fourth-quarter earnings report, scheduled for February 5. Analysts are forecasting earnings per share (EPS) of approximately $7.30 for the quarter. For the full 2025 fiscal year, the consensus EPS estimate ranges between $23.00 and $23.70. From a technical perspective, the $1,050 level, recently breached, is expected to serve as a near-term support zone for the share price.