TLDR:
- Eli Lilly reported Q1 earnings of $3.34 per share, beating expectations of $3.26
- CVS Health announced its PBM Caremark will prefer Novo Nordisk’s Wegovy over Lilly’s Zepbound starting July 1
- Lilly cut 2025 earnings guidance due to a $1.6 billion charge for acquiring Scorpion Therapeutics’ oncology program
- Mounjaro and Zepbound sales reached $3.8 billion and $2.3 billion respectively, in line with expectations
- Despite strong performance, LLY stock fell 6.3% in premarket trading while Novo Nordisk shares jumped 5%
Eli Lilly (LLY) reported better-than-expected first-quarter earnings on Thursday, yet the pharmaceutical giant’s stock dropped sharply in premarket trading. The decline came after CVS Health announced a major blow to Lilly’s weight-loss drug business.
Lilly posted adjusted earnings of $3.34 per share for the quarter, exceeding Wall Street’s expectations of $3.26. Revenue came in at $12.7 billion, matching analyst estimates.
The company’s blockbuster diabetes and weight-loss drugs continued to drive growth. Mounjaro generated $3.8 billion in sales, while Zepbound brought in $2.3 billion during the quarter.
U.S. sales jumped 49% compared to the same period last year. This growth was primarily driven by higher volumes of Mounjaro and Zepbound.
However, these impressive numbers were overshadowed by CVS Health’s announcement. The pharmacy giant said its pharmacy benefit manager, Caremark, will prefer Novo Nordisk’s Wegovy over Lilly’s Zepbound for its members starting July 1.
This decision sent Lilly’s stock tumbling 6.3% to $842 in premarket trading. Meanwhile, Novo Nordisk shares jumped 5% on the news.
Market Competition Intensifies
The CVS decision marks a major shift in the highly competitive weight-loss drug market. Until now, Lilly appeared to be gaining the upper hand against its main rival, Novo Nordisk.
Wall Street analysts had increasingly viewed Lilly as the likely long-term winner in the obesity drug market. Goldman Sachs analyst Asad Haider previously noted that Lilly had “a fortress around manufacturing, with rebate walls” and “first mover advantage.”
The company also reported promising results for its experimental weight-loss pill, orforglipron, in mid-April. This oral alternative could potentially offer similar results to injectable drugs like Mounjaro, but in a more user-friendly format.
However, the CVS preference for Wegovy creates a new hurdle for Lilly’s growth plans in the weight-loss space.
Financial Outlook Adjusted
Lilly also revised its 2025 earnings guidance downward. The company now expects adjusted earnings between $20.78 and $22.28 per share, down from its previous forecast of $22.50 to $24.
This reduction wasn’t related to operational performance but rather to a $1.6 billion charge tied to Lilly’s January acquisition of Scorpion Therapeutics’ oncology program.
The company maintained its revenue guidance of $58 billion to $61 billion for the year.
Lilly noted that potential policy shifts, including pharmaceutical sector tariffs proposed by President Trump, aren’t reflected in the current guidance.
The tariff issue has become a growing concern for pharmaceutical companies. Pfizer CEO Albert Bourla recently expressed cautious optimism about the situation, saying, “We are engaging and we have very productive discussions with all the secretaries that are involved.”
Lilly has taken proactive steps to address potential tariff risks. The company recently announced a $27 billion plan to build four new manufacturing plants in the United States.
Despite the current stock dip, Lilly remains a Wall Street favorite. According to TipRanks, 19 out of 20 analysts rate Eli Lilly a “Buy,” with an average 12-month price target of $984.63.
This target represents approximately 9.5% upside from Monday’s closing price of $898.95. However, there’s a wide spread in projections, with the highest target at $1,124 and the lowest at $700.
The stock has performed well year-to-date, rising 16% since the start of 2025. Lilly’s market value remains the largest in the healthcare sector.
The stock’s fall today highlights the competitive pressures facing even the strongest performers in the pharmaceutical industry. The CVS Health decision shows how quickly fortunes can change in the high-stakes weight-loss drug market.
