Goldman Sachs analyst Asad Haider says investors are overreacting to the late-stage data Eli Lilly & Co (NYSE: LLY) reported for its experimental oral obesity pill, orforglipron, on Thursday.
Lilly reported blockbuster results for the second quarter and raised its full-year guidance on August 7th.
Still, the healthcare stock tumbled after management said the highest dose of “orforglipron” helped study participants lose 12.4% of their body weight on average, materially less than 15% expected.
However, long-term investors should consider buying Eli Lilly stock on the pullback because the sell-off was rather excessive and has created an opportunity to load up on a quality name at a deep discount, Haider told CNBC in an interview today.
Why orforglipron data still bodes well for Eli Lilly stock
According to Asad Haider, the market’s response to Lilly’s obesity pill trial data is disproportionate to the actual results.
While the drug missed the so-called “Street bar”, the analyst emphasized that orforglipron remains a commercially viable product.
On “Money Movers”, he dubbed the LLY pill scalable, especially in overseas markets, adding that the tolerability profile of the drug also held up well in the late-stage trial.
In Haider’s view, with 12.4% weight loss and minimal gastrointestinal side effects, orforglipron is bound to appeal to a broad segment of patients worldwide.
He’s convinced the sell-off in Eli Lilly shares reflects short-term sentiment rather than longer-term fundamentals – and that the pill will still play a meaningful role in the obesity treatment landscape.
Does the data alter orforglipron’s total addressable market?
While the trial results fell short of expectations, Haider doesn’t believe the total addressable market (TAM) for orforglipron has materially changed.
The obesity market remains vast and underpenetrated, with over 100 million obese individuals in the US and 900 million globally.
GLP-1 drugs currently reach only 3.0% of the US market, with projections for 15% penetration by the end of this decade.
Haider agreed that some of this opportunity may shift toward rival Novo Nordisk’s competing oral Semaglutide, but said orforglipron will still maintain relevance across diverse patient populations.
The drug’s convenience and scalability make it a viable option in a fragmented and growing market, which is why LLY stock is worth buying on the post-trial-data weakness.
Should you buy Eli Lilly stock on the pullback?
Goldman Sachs analyst Asad Haider maintained his “buy” rating on LLY shares today with a price target of $883, indicating potential upside of more than 35% from current levels.
Lilly’s strong Q2, driven mostly by its core franchises (Mounjaro and Zepbound) and raised outlook, warrants buying the dip this week.
Plus, a dividend yield of 0.94% makes up for another strong reason to have Eli Lilly stock in your long-term investment portfolio.
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