Eli Lilly and Co. (NYSE:LLY) has seen better days. The stock is up 26.04% for the last year but has struggled recently, falling 17.57% over the last month.
Chart created using Benzinga Pro
Lilly stock is well below its summer highs and is trading at $746.94 at the time of writing. The once red-hot obesity drugmaker is in the crosshairs of bearish technicals and political uncertainty.
Could the selloff be an overreaction?
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Bearish Signals Galore For LLY Stock
Lilly stock is trading beneath its eight-, 20-, and 50-day exponential moving averages, firmly positioning it in a bearish trend. The Relative Strength Index (RSI) of 33.02 indicates the stock is teetering on oversold territory, while the MACD at negative 37.55 confirms strong downward momentum.
Even the 200-day simple moving average of $835.76 is now a distant memory, amplifying concerns.
Kennedy Sends Drugmakers Tumbling
The broader selloff in anti-obesity drugmakers like Eli Lilly, Novo Nordisk AS (NYSE:NVO) and Amgen Inc (NASDAQ:AMGN) has been linked to fears over the possible appointment by President-elect Donald Trump of Robert F. Kennedy Jr. as head of the Department of Health and Human Services.
Investors worry his critical stance on GLP-1 weight-loss treatments could lead to reduced insurance coverage or pricing pressures. While the agency has limited power to enact sweeping changes without Congress, the uncertainty has spooked the market.
Still Room To Run?
For contrarian investors, the fundamentals paint a different picture. Eli Lilly's Zepbound and Mounjaro sales are projected to hit $18 billion by 2026, doubling from 2024 estimates.
Total revenue is expected to climb to $69 billion by 2026, with earnings soaring to $30 per share — more than double the current $13.26.
And at 33.2 times forward earnings (per Benzinga Pro data), the stock's valuation looks far more attractive than its July peak of 57.2 times.
What's Next?
Jim Cramer's take sums up the contrarian sentiment: "This stock is as hated now as it was loved not that long ago. I think it's a buy... enough on the selling."
For long-term investors, Eli Lilly's dominance in the burgeoning obesity drug market remains a compelling growth story.
Whether the selloff is a red flag or a golden opportunity may depend on how much faith investors have in the fundamentals.
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Photo courtesy of Eli Lilly.
