Key insights
- The article discusses Eli Lilly's recent price decline due to concerns about its weight loss drug competition and a price target reduction by HSBC. While the author believes LLY is a good long-term investment, the article questions how much LLY needs to beat earnings expectations to regain Wall Street's confidence. This suggests potential short-term bearish pressure on LLY and the broader pharmaceutical sector if earnings disappoint.
LLY really has taken a beating recently. It went from a high of 1134 to now around 882. Part of the issue is the impression of it not doing as well in its weight loss drug especially against multiple upcomers like NVO. But the other main issue is the huge price target drop from $1070 to $850 by HSBC.
LLY did beat its previous earnings target by about 8%, the current expectation is that it will beat the upcoming earnings again, but question is how much and how significantly does it have to beat it for wall street to look at it positively.
But LLY should always have a place as a long term investment right? It would always have a good growth within the pharmaceutical industry?
When would the price become reasonable enough to enter?