By Bhanvi Satija and Patrick Wingrove
(Reuters) – Eli Lilly’s (LLY) stock tumbled 8% on Tuesday after it forecast fourth-quarter sales of weight-loss drug Zepbound below Wall Street estimates, marking the second time sales have disappointed since the drug’s launch in late 2023.
The company’s shares were trading at $740.80, on track for their worst single-day decline in nearly four years. Lilly’s stock went on a tear in the beginning in 2023 as investors bet on the drug’s popularity, with the company’s shares more than doubling till mid-2024.
The stock stumbled in October last year after Zepbound sales disappointed, and has been subdued since.
The company said its previous forecast anticipated faster market growth for the class of drugs known as incretins, which include both Zepbound and related diabetes drug Mounjaro.
Lilly expects $3.5 billion in Mounjaro sales in the fourth quarter, and $1.9 billion for Zepbound. Analysts had expected the drugs to bring in $5.35 billion and $2.08 billion, respectively, according to data compiled by LSEG.
The drugmaker’s Chief Financial Officer Lucas Montarce said in an interview that wholesalers did not seek to build up their stocks of incretins, including Zepbound, toward the end of the year as they have in the past.
“This year, given all doses are available … that (trend) did not materialize. We finished pretty much at the same inventory level in the channel that we had in the third quarter.”
In October, the company blamed physical and financial constraints at wholesalers after sales of the two drugs fell short of estimates in the third quarter.
Lilly’s forecast “cut (is) likely less a shock to investors but may still shake some confidence in incretin demand,” said BMO Capital Markets analyst Evan Seigerman.
The company’s shares trade at a 12-month forward price-to-earnings ratio of 34.59, much higher than peers such as Merck & Co and Pfizer, which trade at 10.72 and 9.07, respectively.
Lilly also forecast 2025 sales between $58 billion and $61 billion, the midpoint of which is above analysts’ estimates of $58.52 billion.
(Reporting by Bhanvi Satija in Bengaluru and Patrick Wingrove in San Francisco; Editing by Shounak Dasgupta)
