Eli Lilly: Four Reasons Investors Should Seize This Opportunity

Eli Lilly and Company has been a prominent player in the pharmaceutical industry, particularly known for its innovative treatments. Currently, the stock is facing a dip, with shares down 17.7% from their recent highs, presenting a potential buying opportunity for investors.

As of now, Eli Lilly's stock price sits at $788.69, showing a loss of -8.79 (-1.10%). The company remains a key competitor in the GLP-1 (Glucagon-like Peptide-1) market with its flagship drug, Tirzepatide, marketed as Mounjaro. This treatment, aimed at managing type 2 diabetes and obesity, has seen a remarkable 128% year-over-year revenue increase. This trend does not indicate any signs of slowing down.

1) Impressive Earnings Despite Short-Term Setbacks

Eli Lilly's financial performance showcases its strength, although recent earnings results fell short of what analysts anticipated. In the third quarter of 2024, the company reported earnings of $1.18 per share, missing estimates by 27 cents. While total revenues increased by 20.4% year over year to reach $11.44 billion, they still did not meet the expected $12.09 billion. However, excluding the revenue from Zyprexa, which was sold in 2023, the growth rate actually represented a robust 42% increase. Additionally, the earnings included one-off charges of $2.83 billion due to in-process research and development costs related to the acquisition of Morphic.

2) Continued Success of Tirzepatide

The company’s GLP-1 drugs, particularly Tirzepatide, are continuing to perform exceptionally well. Recently, Tirzepatide received approval for treating obstructive sleep apnea. In clinical trials, it has demonstrated superior results compared to its closest competitor's drug, leading to a 20.2% average body weight loss. During the third quarter, Mounjaro's revenues surged 121% to $3.11 billion, while another drug, Zepbound, generated $1.28 billion. Supply shortages limited the revenue potential for both products, but their ongoing success indicates a strong market position.

3) The Future with Retatrutide

Eli Lilly is not just resting on its laurels; it is actively developing next-generation treatments. The company plans to introduce a pill version of Tirzepatide, named Orforglipron, by 2026. Alongside this, the triple agonist drug, Retatrutide, is showing promise in clinical trials, achieving an average weight reduction of 24.2% over 48 weeks. The safety of Retatrutide is comparable to other therapies, which is an encouraging sign for future market acceptance.

4) Technical Analysis Supports an Upward Trend

From a technical standpoint, Eli Lilly's stock is displaying a symmetrical triangle pattern. This pattern features lower trendline support at $711.40 meeting descending resistance at approximately $907.98. Recent trends show a daily anchored VWAP support at $776.82, and a breakout above $787.22 suggests a potential rise. The daily Relative Strength Index (RSI) is on the rise, indicating increasing buying momentum. Investors may also consider strategically placing cash-secured puts at Fibonacci support levels to secure shares at a lower price if desired.

In conclusion, while Eli Lilly's shares may currently reflect a temporary setback, the company's strong revenue growth, innovative drug pipeline, and promising future outlook suggest that this could be an ideal time for investors to consider entering or expanding their positions in the stock.

EliLilly, Stocks, Investment