Will Zepbound’s growth live up to the hype?

Investors are hoping to hit the reset button with Eli Lilly ‘s earnings report on Thursday morning. In mid-January, the maker of obesity medication Zepbound lowered its fourth-quarter revenue forecast as sales of the GLP-1 drug ramped up slower than anticipated. The warning followed disappointing third-quarter results in October, which led to months of choppy stock performance. Shares are trying to regain momentum, with a 9% advance since the year began. However, the stock closed Tuesday 15% below the 52-week high of $972.53 that was reached in late August, when many thought the company was on a runway to hit a $1 trillion valuation. Reliability will be key to turning around the stock’s performance. Analysts surveyed by LSEG predict Lilly will earn $4.95 per share on $13.59 billion in revenue for the fourth quarter. And they are projecting earnings will rise to $22.86 per share on sales of $59.21 billion in 2025. To be sure, it has been a challenge for Lilly to live up to the hype around weight loss drugs, but it also must hit the targets it sets for itself, analysts say. ‘Derisked’ “Lilly has already endured the pain of its full year 2024 earnings, having released approximate topline revenue numbers, and Zepbound and Mounjaro revenue figures too,” Bernstein analyst Courtney Breen wrote in a note to clients. “Revenue for the year was a $400m miss vs the bottom end of company guidance and incretin revenues too missed vs consensus.” Breen said the results are “derisked,” but investors will still be keyed into tirzepatide’s outlook, especially given the expansion of its label to include treatment of obstructive sleep apnea. And investors also want to hear more about Lilly’s pipeline, including an update on orforglipron , an experimental pill for obesity. Zepbound and rival Wegovy are both administered via an injection. An oral option would be easier to manufacture and would likely be preferred by some patients. According to FactSet, on average analysts predict Zepbound sales will more than double in 2025 to $10.39 billion from the prior year, while Mounjaro sales are expected to rise from an estimated $11.63 billion in 2024 to $18.17 billion in 2025. Heading into the quarterly results, Wall Street’s confidence has been shaky. Several analysts have lowered price targets for the stock, with the average now at $982.25, per LSEG. That’s about 16% above where it is currently trading. LLY 1Y mountain Eli Lilly shares over the past year. Both Lilly and its competitor Novo Nordisk have invested billions to boost manufacturing capacity of their game-changing obesity treatments. GLP-1 drugs, which also treat diabetes, mimic stomach hormones in the body to regulate blood sugar, slow down how quickly the stomach empties and suppress appetite. Wall Street has made eye-popping predictions about how large the market could grow for Zepbound and Novo Nordisk’s competing drug Wegovy given the large number of Americans who are struggling with obesity and overweight. Some analysts expect these drugs to become as common as blood pressure medications over time. A turf war Demand already has been strong enough to cause periodic shortages of the drugs, a situation that allowed compounding pharmacies to step in and offer their own legal versions of GLP-1. The window for these copycats is closing for Zepbound, which is no longer in shortage , according to the Food and Drug Administration. Wegovy and Ozempic hope to come off the list shortly, according to Novo Nordisk. Both sides are fighting to protect their turf , and challenges to the agency’s decisions are ongoing. While GLP-1 drugs are the fastest-growing part of Lilly’s portfolio, there are other drugs investors will be looking to hear about, including Verzenio, which is becoming the standard of care for a specific type of breast cancer; Omvoh, a treatment for ulcerative colitis; and Kisunla, its Alzheimer’s treatment. Wells Fargo analyst Mohit Bansal said he expects there is strength across Lilly’s diversified portfolio. Still, he was among the analysts who revised his price target lower for Lilly shares. Bansal expects the company will forecast 2025 earnings in the range of $23 to $24.50 per share. “While we still do not view LLY as facing a demand issue, we think the total diabetes/obesity opportunity is becoming somewhat of a show-me story with investors needing to closely track script trends to see if supply, access efforts, and demand generation are paying off,” he said. The bounce in Novo Nordisk’s shares on Wednesday was encouraging. Novo’s NYSE-listed shares were up more than 4% on the back of earnings that topped expectations. Lilly shares rose more than 2% as well. Novo Nordisk was upbeat about the outlook for obesity treatments, with CEO Lars Fruergaard Jørgensen telling CNBC that the company expects to bring a weight loss pill to the U.S. market before Eli Lilly. One development that might excite investors would be a decision to split Eli Lilly stock. Bank of America included it on a list of companies that the firm believes might consider a stock split based on the shares’ lofty price and the company’s recent strength.