Goldman Sachs’ Asad Haider believes investors have overreacted to late-stage results Eli Lilly & Co. (NYSE: LLY), reported on Thursday, for the experimental orforglipron oral obesity drug.
Lilly announced its second-quarter results and increased the full-year outlook on 7 August thTHE STRETCH
The healthcare shares fell after the management stated that the most potent dose of Orforglipron helped participants in the study lose an average of 12.4% body weight, which was less than the 15% they expected.
Haider said in an interview with CNBC today that long-term investors might want to consider purchasing Eli Lilly shares on the decline because it was a rather large selloff and created an excellent opportunity for a discount on an established brand.
Orforglipron stock still looks good despite the data
Asad Haider says that the response of the market to Lilly’s trial results on obesity pills is disproportional to their actual outcomes.
The analyst said that while the drug did not reach the “Street Bar”, it is still a viable commercial product.
He called the LLY pills scalable in “Money Movers”, especially for overseas markets. The tolerability of the drugs also performed well at the late stage trial.
Haider believes that orforglipron will appeal to many patients around the world, given its 12.4% weight reduction and its minimal side effects.
He believes that short-term sentiment is behind the recent drop in Eli Lilly’s stock, and not longer-term fundamentals. The pill will continue to play an important role in obesity treatments.
Is the total market for orforglipron affected by these data?
Haider believes that the TAM for orforglipron is not materially different, despite the fact the results of the trials were less than expected.
Over 100 million Americans and over 900 millions worldwide are obese. The market is vast, but under-penetrated.
GLP-1 drugs are currently only available in the US at a market share of 3.0%, but projections show that this will increase to 15% by 2020.
Haider acknowledged that Semaglutide oral, a competing product from Novo Nordisk, may gain some market share. However orforglipron is still relevant to a variety of patient populations.
Its convenience and scaleability makes it an attractive option on a growing and fragmented market. This is why LLY is a good investment despite the weakness in post-trial data.
Buy Eli Lilly Stock on Pullbacks?
Goldman Sachs analyst Asad Hader has maintained his “buy’ rating for LLY today. His price target is $883 which indicates a potential gain of over 35% from the current level.
Lilly’s solid Q2 and improved outlook are reasons to buy the dips this week.
A dividend yield of 0.94 percent is another reason why you should include Eli Lilly in your portfolio.
As new information becomes available, this post Eli Lilly’s stock sale is deemed ‘overdone.’ The weight loss pill still remains “commercially viable.” This article may change as the updates develop.
This site is for entertainment only. Click here to read more
