Eli Lilly and Company (LLY Quick QuoteLLY - Free Report) has reached a significant support level, making it an attractive option for investors from a technical standpoint. Earlier this week, the stock broke through its 50-day simple moving average (SMA), indicating a potential short-term bullish trend.

The 50-day SMA is a key indicator for traders and analysts, used to identify support and resistance levels. It is considered particularly important as it's the first marker of an uptrend or a downtrend.

The stock has traded below its 50-day average since it announced first-quarter results in early May, mainly due to earnings miss, guidance cut and some positive developments at rival Novo Nordisk (NVO Quick QuoteNVO - Free Report)

Let’s understand the company’s strengths and weaknesses to better analyze how to play the stock as it crosses the 50-day SMA mark.

Mounjaro & Zepbound: Key Top-Line Drivers for Lilly

Lilly has a strong portfolio of medicines to treat diabetes and other cardiometabolic diseases, and its cardiometabolic business is its most successful business, particularly with the success of its popular tirzepatide medicines, diabetes drug Mounjaro and weight loss medicine, Zepbound.

Despite being on the market for less than three years, GLP-1 medicines, Mounjaro and Zepbound, became key top-line drivers for Lilly, with demand rising rapidly. Mounjaro and Zepbound generated combined sales of $6.15 billion in the first quarter of 2025, accounting for around 48% of the company’s total revenues.

Though sales of Mounjaro and Zepbound were below expectations in the second half of 2024, hurt by slower-than-expected growth and unfavorable channel dynamics, their sales picked up in the first quarter of 2025, driven by launches of the drugs in new international markets and improved supply from ramped-up production.

Both drugs enjoy increasing market share in the United States.

LLY’s Efforts to Drive Mounjaro & Zepbound Sales

We believe that increased uptake in outside U.S. markets and deeper penetration in the U.S. market will continue to drive Mounjaro and Zepbound’s growth in future quarters.

Mounjaro was recently launched in China, and Lilly expects to increase commercial launches in the country in the second half of 2025 as supply improves. Lilly also launched Mounjaro in India and Mexico recently and plans to continue with additional country launches throughout 2025.

Approvals for new indications can also drive sales of Mounjaro and Zepbound higher. In late December, the FDA approved Zepbound for its second indication, moderate-to-severe obstructive sleep apnea in adults with obesity. In addition, LLY filed tirzepatide for heart failure, which further expands the opportunity for the candidate. It also expects to announce data from a cardiovascular outcome study on tirzepatide this year.

In 2025, Lilly launched additional Zepbound lower-priced vial doses and offered new savings for self-pay patients to boost sales.

LLY’s New Drugs & Pipeline Success

Other than Mounjaro and Zepbound, Lilly has gained approvals for some other new drugs in the past couple of years. These include Omvoh for ulcerative colitis and Crohn's disease, BTK inhibitor Jaypirca for mantle cell lymphoma and chronic lymphocytic leukemia, Ebglyss for moderate-to-severe atopic dermatitis and Kisunla (donanemab) for early symptomatic Alzheimer's disease. Its new drugs are also contributing to its top-line growth.

Lilly expects its new drugs, Mounjaro, Zepbound, Omvoh, Jaypirca, Ebglyss and Kisunla, along with the expanded use of existing drugs, to drive sales growth in 2025. It also expects the potential launch of new medicines like imlunestrant for metastatic breast cancer to contribute to growth in 2025.

Lilly is also making rapid pipeline progress in obesity, diabetes and cancer, with several key mid and late-stage data-readouts expected this year.

Lilly is investing broadly in obesity and has several next-gen candidates currently in clinical development. These include two late-stage candidates, orforglipron, an oral GLP-1 small molecule, and retatrutide, a GGG tri-agonist and some mid-stage candidates, bimagrumab, eloralintide and mazdutide.

Data from the first of the seven phase III studies on orforglipron in type II diabetes and obesity was announced in April 2025. In the study, orforglipron lowered A1C by an average of 1.3%-1.6% across doses and also reduced weight by an average of 16lb (7.9%) at the highest dose. Lilly expects to report additional results from the phase III ACHIEVE clinical program, as well as data from the phase III ATTAIN clinical program evaluating orforglipron for obesity, later this year, which could be important catalysts for the stock. It plans to file regulatory applications for orforglipron in obesity by the end of this year and for type II diabetes in the first half of 2026.

Competition Heating Up in the Obesity Space

The obesity market is expected to expand to $100 billion by 2030, according to data from Goldman Sachs, which means fierce competition is inevitable. Lilly and Novo Nordisk presently dominate the market.

Mounjaro and Zepbound face strong competition from Novo Nordisk’s semaglutide medicines, Ozempic for diabetes and Wegovy for obesity. Novo Nordisk has already filed an application for an oral version of Wegovy and also has several next-generation candidates in its obesity pipeline, like CagriSema and amycretin.

Several companies like Amgen (AMGN Quick QuoteAMGN - Free Report) and Viking Therapeutics (VKTX Quick QuoteVKTX - Free Report) are also making rapid progress in the development of GLP-1-based candidates in their clinical pipeline.

Amgen has begun a broad phase III program on its dual GIPR/GLP-1 receptor agonist, MariTide, across obesity, obesity-related conditions and type II diabetes, with the first two phase III studies initiated in March. Viking Therapeutics’ dual GIPR/GLP-1 receptor agonist, VK2735, is being developed both as oral and subcutaneous formulations for the treatment of obesity. Phase III studies with the subcutaneous formulation of VK2735 are on track to begin this year.

AMGN and VKTX’s products can pose strong competition to Mounjaro/Zepbound and NVO’s Ozempic/Wegovy in the future.

Others like Roche, Merck and AbbVie are also looking to enter the obesity space by in-licensing obesity candidates from smaller biotechs, which could threaten Novo Nordisk and Eli Lilly’s dominance in the market.

LLY’s Other Headwinds

Lilly is battling several challenges at present. Sales of its key medicine, Trulicity, are declining in the United States due to competitive dynamics, including Mounjaro switches and supply constraints. Prices of most of Lilly’s products are declining in the United States, including Mounjaro and Zepbound, primarily due to changes to estimates for rebates and discounts. Lilly’s U.S. net price has declined every year since 2021. In 2025, Lilly expects a mid-to-high single-digit percentage price decline, including U.S. Part D changes. Potential competition in the GLP-1 diabetes/obesity market is another headwind.

Uncertainties around tariffs and a volatile macro environment also remain a headwind.

The sky-high tariffs imposed by the United States and retaliatory tariffs by China and some other countries hurt global stock markets. Although the massive tariffs imposed by the United States and China are currently on pause, this is only a temporary suspension. The uncertainty around tariffs and trade production measures remains, which has muted economic growth.

CVS Caremark, a major pharmacy benefit manager (“PBM”), has signed a partnership with NVO to make Wegovy its preferred GLP-1 therapy for weight loss, effective July 1. Hims & Hers Health also signed a distribution partnership with NVO in April to offer Wegovy at a discounted price to its platform users. It remains to be seen if NVO’s deals will affect Zepbound’s market share going forward. Earlier this week, LLY said it won’t partner with telehealth firms selling compounded versions of Zepbound or Wegovy — indirectly snubbing $HIMS.

LLY’s Stock Price, Valuation and Estimates

Lilly’s stock has risen 5.6% so far this year compared with the industry’s increase of 2.9%. The stock has also outperformed the sector and S&P 500 index, as seen in the chart below.

LLY Stock Outperforms Industry, Sector & S&P 500

Image Source: Zacks Investment Research

From a valuation standpoint, Lilly’s stock is expensive. Going by the price/earnings ratio, the company’s shares currently trade at 31.34 forward earnings, higher than 15.51 for the industry. However, the stock is trading below its 5-year mean of 34.54.

LLY Stock Valuation

Image Source: Zacks Investment Research

Estimates for Lilly’s 2025 earnings have declined from $23.49 to $21.95 per share in the past 60 days, while those for 2026 have declined from $31.28 to $30.91 over the same timeframe.

LLY Estimate Movement

Image Source: Zacks Investment Research

Stay Invested in LLY Stock

Lilly’s tremendous success with Mounjaro and Zepbound has made it the largest drugmaker with a market cap of more than $750 billion, and its stock price has crossed $800 per share. Lilly’s stock has shot up more than 500% in the past five years, mainly due to its successful new drug launches, particularly Mounjaro and Zepbound, and its solid pipeline potential.

In 2025, Lilly expects to record revenues in the range of $58.0 billion to $61.0 billion, indicating an impressive 32% year-over-year growth. Lilly’s revenue growth is being driven by higher demand for Mounjaro, Zepbound, Verzenio, and others, which is making up for the decline in sales from Trulicity.

Despite an expensive valuation and declining estimates, we suggest investors who own this Zacks Rank #3 (Hold) company retain it as it has solid growth prospects despite some near-term headwinds. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lilly’s stock is trading below its 5-year mean now, creating a buying opportunity for long-term investors.