Eli Lilly (LLY) Stock Downgraded Despite Market Dominance - Here’s Why It’s a Buying Opportunity

Wall Street analysts just hit Eli Lilly with a downgrade—because apparently dominating the diabetes and weight-loss markets isn't good enough anymore.

The Contrarian Take

While traditional finance gets spooked by short-term metrics, smart money recognizes that controlling two of healthcare's hottest sectors tends to work out pretty well long-term. But hey, analysts gotta analyst—their Excel models probably can't handle actual market disruption.

Pharma's crypto equivalent would be dumping Bitcoin because it 'only' processes seven transactions per second while ignoring the trillion-dollar store of value narrative. Some things never change in traditional finance—they'll downgrade greatness chasing yesterday's benchmarks.

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Berenberg analyst Kerry Holford says that performance has been powered by what was once an underappreciated, best-in-class obesity and diabetes franchise, and she has long been a strong supporter of the investment case. The key, however, is in the word “once.” With investors now fully aware of Lilly’s dominance, the element of surprise has faded.

“While we expect Lilly to remain in the obesity driving seat, we conclude the obesity market upgrade cycle has plateaued and consensus expectations for Lilly’s franchise are high,” the analyst opined. “Berenberg forecasts are now slightly below consensus.”

That shift in sentiment led Holford to downgrade her LLY rating from Buy to Hold (i.e., Neutral), while trimming her price target from $970 to $830. (To watch Holford’s track record, click here)

But don’t get it wrong – Lilly remains a formidable force in obesity treatments. Physicians Holford consulted continue to prefer Zepbound over Novo Nordisk’s Wegovy, pointing to stronger weight loss outcomes and better tolerability. Yet, Novo has begun a renewed offensive, Zepbound’s U.S. market share has flattened, and the CVS formulary shift has made it easier for patients to transition to Wegovy. With Novo gaining real-world momentum and expanding Wegovy’s label (including MASH approval and likely heart failure by year-end), Lilly faces tougher competition ahead.

“We expect more significant obesity drug price erosion from 2026 as both players launch next-generation oral therapies,” Holford warns.

That looming battle makes Lilly’s upcoming oral GLP-1 launch especially important. The company’s candidate, orforglipron, is expected to debut soon after Novo’s oral Wegovy hits the market. While Phase 3 results came in at the lower end of expectations, Holford still sees a strong enough clinical profile to back ~$18 billion in global peak sales across obesity and diabetes. With both Berenberg and consensus forecasts assuming Lilly will dominate the oral segment thanks to ease of use and supply scale, the stakes are clear: “Lilly cannot falter in this regard,” Holford emphasized.

Beyond obesity, Lilly’s broader R&D engine continues to impress. Its 2020 RORI (return on research investment) cohort has delivered standout results, primarily thanks to tirzepatide. Looking ahead, Holford projects a 16% return on the 2025 pipeline cohort – well above the group average of 9% and comfortably over the 8% cost of capital. Potential upside could come from late-stage drugs such as imlunestrant (for breast cancer) and lepodisiran (for high cholesterol).

Still, that strength is not enough to sway Holford and 3 other analysts from the sidelines. Yet, Wall Street as a whole remains firmly bullish, with 16 analysts rating LLY a Buy, giving it a Strong Buy consensus. The average price target of $921.71 points to ~21% upside over the next year. (See)

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