Eli Lilly & Co. (NYSE:LLY) shares faced downward pressure on Tuesday after HSBC analysts turned bearish, suggesting that the weight-loss market is overly optimistic regarding revenue potential.
- Analyst Rajesh Kumar downgraded the U.S. drugmaker from Hold to Reduce, while cutting the price forecast from $1070 to $850.
According to Bloomberg, the downgrade (the stock’s lowest on Wall Street) comes after a bit of back and forth.
HSBC downgraded Eli Lilly’s stock to a sell-equivalent last April, citing excessive optimism and unattractive risk-reward. Four months later, they upgraded it to hold, noting potential upside if the obesity market maintains price discipline. However, they have now reassessed, stating that the stock is “priced to perfection” and the risk-reward is no longer balanced.
The analysts expressed concern that Wall Street’s consensus for the obesity drug market—projected at over $150 billion by 2032—is too high. HSBC estimates global revenues of $80-$120 billion for the same period.
A primary driver of this skepticism is the intensifying competition with Novo Nordisk A/S (NYSE:NVO).
Kumar wrote that the drugmaker’s market share will be driven more by aggressive price cuts than by specific product features.
Skepticism Over Experimental Pipelines For Eli Lilly
While Eli Lilly has seen its valuation triple over the last four years, becoming the first trillion-dollar biopharmaceutical firm, Bloomberg highlighted that HSBC warns that the path forward is fraught with execution risks.
Specifically, the analysts flagged Wall Street’s $1.5 billion estimate for orforglipron, Lilly’s experimental oral weight-loss medicine, in 2026 as unrealistic.
The company has submitted orforglipron for regulatory approval in over 40 countries, with a potential U.S. decision for obesity treatment expected in the second quarter of 2026.
They noted that patient compliance and the long-term persistence of these drugs might fail to meet current expectations.
Historical Context Of HSBC Ratings
This marks the second time within a year that HSBC has turned bearish on the stock.
After a previous downgrade in April followed by an upgrade to Hold four months later, the firm now argues that the “bullish world view” embedded in the company’s guidance is no longer sustainable.
Eli Lilly is also working to ease of compunding concerns. Most recently, the company said internal testing detected a previously unidentified impurity formed when the two substances interact.
LLY Stock Price Activity: Eli Lilly shares were down 5.38% at $935.93 at the time of publication on Tuesday, according to Benzinga Pro data.
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