Why Eli Lilly, Novo Nordisk, and Viking Therapeutics Stocks All Dropped on Tuesday

Rich Smith, The Motley Fool

Tue, Jan 14, 2025, 10:11 AM 5 min read

Bad news for Eli Lilly (NYSE: LLY) stock dragged down shares of rival companies in the market for GLP-1 diet drugs on Tuesday. Lilly updated investors on its expected revenue for 2024 this morning, and gave new guidance for 2025 revenue as well -- and while its 2025 prediction was a bit more than Wall Street had expected, its prediction for 2024 was a bit less.

As of 10:45 a.m. ET, Lilly shares are shedding 6%. Archrival Novo Nordisk (NYSE: NVO) is down 3.3% in sympathy, while Viking Therapeutics (NASDAQ: VKTX), which is hard at work on its own GLP-1 drugs but hasn't yet gotten them to market, is suffering worst of all -- down 8.1%.

What Eli Lilly said on Tuesday

In a press release this morning, Eli Lilly was pleased to announce that 2024 revenues are tracking about $4 billion above what it had expected to receive at the start of this year, and that the company now expects to collect about $45 billion total for all of 2024 -- up 32% from 2023.

That's the good news.

The bad news is that the bloom may be coming off the GLP-1 rose, which is presumably the reason why not only Eli Lilly but Novo Nordisk and Viking Therapeutics stock are suffering this morning. As Lilly notes, Q4 2024 revenue in particular is tracking to be "approximately $400 million below the low end of recently issued financial guidance" at $13.5 billion.

On the one hand, that's still an amazing amount of money. Management notes that it's 45% more than Lilly got in Q4 2023, and that fully 40% of its Q4 money haul, $5.4 billion, will come from sales of its GLP-1 weight-loss drugs Mounjaro and Zepbound. However, $13.5 billion is still 3% less than what Lilly was hoping to receive, as stated in its Q3 earnings call guidance.

Turning to 2025 guidance, Lilly noted that new medicines and new uses of existing medicines, expansion of production, and global expansion of sales of its diabetes and weight loss drugs should all add up to strong, 32% sales growth in the new year. The company forecasts 2025 sales of $58 billion to $61 billion.

Is it time to sell Eli Lilly stock?

So taken as a whole, is this news bad enough to justify selling Eli Lilly stock -- and all the other GLP-1 stocks, too -- today?

That really depends on how you look at it. On the one hand, sales didn't rise as fast as Lilly might have liked in Q4. On the other hand, though, 32% quarterly growth isn't bad at all. And management's forecast for 2025 sales implies continued 32% growth throughout this new year.

That's hardly bad news for Eli Lilly. In fact, the company is forecasting about $1 billion more sales in 2025, than Wall Street was predicting.

As for the GLP-1 stocks not named Eli Lilly that are also falling today, the news there may be even better.

Again, on the one hand, worries that GLP-1 sales aren't growing as fast as hoped imply that the market for these drugs may not end up quite as big as investors would like it to. That said, Eli Lilly noted that in Q4 2024, the "incretin market" (basically, another name for GLP-1 drugs) "grew 45% compared to the same quarter last year." Lilly's sales, too, grew 45% in the quarter. And this implies that in the final quarter of the year, at least, Lilly didn't gain any market share.

Is it time to buy Novo Nordisk stock?

While neither a positive nor a negative for Lilly, it also means that first-to-market Novo Nordisk didn't lose market share in the quarter, and I'd consider this a positive for that stock, not a reason to sell it.

With Novo Nordisk stock currently costing only 29 times earnings, or roughly one-third the 86 P/E ratio at Lilly, yet presumably growing about as fast as Lilly, I'd say the ultimate upshot of today's news is that Lilly stock isn't any more expensive today than it looked yesterday -- and Novo Nordisk stock may be a bit cheaper than it looks.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk and Viking Therapeutics. The Motley Fool has a disclosure policy.

Why Eli Lilly, Novo Nordisk, and Viking Therapeutics Stocks All Dropped on Tuesday was originally published by The Motley Fool

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