Eli Lilly and Company (NYSE: LLY)

Eli Lilly and Company (NYSE: LLY) is a pharmaceutical firm engaged in the discovery, development, manufacturing, and commercialization of human medicines. Its portfolio in diabetes, obesity, and broader cardiometabolic care features products such as Basaglar, Humalog, Mounjaro, Trulicity, and Zepbound. In oncology, the company offers treatments including Alimta, Retevmo, Tyvyt, and Verzenio.

As per previous Kalkine’s Low Carbon Research Report published on ‘LLY’ on Nov 01, 2024, Kalkine provided an ‘Buy’ stance on the stock at USD 829.74 based on fundamental analysis and the stock price has now moved up by ~ 33.77% since then, attaining both resistance 1 and resistance 2.

Noted below are the details of support and resistance levels provided in our previous report:

Rationale:

• Pricing Pressure in Key Markets: The company continues to face meaningful pricing pressure, particularly in the United States, where revenue reflected a 15% price decline year-over-year. This sustained erosion in realized pricing has limited the full benefit of strong volume expansion and remains a structural constraint on U.S. revenue quality. The downward price trajectory indicates continued reimbursement headwinds and competitive dynamics that may weigh on margin durability in future periods.
• Product-Level Access Challenges: Despite strong performance in several therapeutic categories, certain products experienced access-related setbacks. Notably, Zepbound’s U.S. total prescription share declined by 2 percentage points due to its exclusion from CVS template plans, leading to disrupted patient access and slower momentum in a key obesity franchise. Although new patient starts began to recover, this episode underscores the company’s vulnerability to formulary decisions by large pharmacy benefit managers.
• Elevated Operating Expenses and Special Charges: The company’s cost profile reflects ongoing pressure, with over USD 364 million in asset impairment, restructuring, and other special charges recorded in the quarter. These recurring adjustments, along with significant research and development spending, contribute to a higher operating-expense base. Such expenses highlight the financial burden associated with pipeline advancement, portfolio transitions, and organizational realignment.
• Increased Tax Burden and Regulatory-Related Costs: The effective tax rate rose to 22.8%, partly due to the impact of U.S. tax law changes that added USD 350 million in additional tax charges. These incremental costs depressed reported earnings and represent a persistent regulatory headwind. The company’s financials continue to be sensitive to tax policy changes, which may adversely affect net profitability in future reporting periods.

Valuation (Using Price/Earnings per share Multiple)

Share Price Chart

Conclusion

The company’s performance is tempered by several operational and financial headwinds that weaken its overall growth narrative. U.S. revenue continues to be constrained by significant pricing pressure, while access challenges—such as the CVS exclusion that reduced Zepbound’s prescription share—demonstrate the company’s vulnerability to payer decisions. Additionally, profitability was affected by elevated special charges, including sizable restructuring and impairment costs, as well as a higher effective tax burden driven by recent policy changes. Together, these factors indicate rising cost pressures, uneven product accessibility, and external regulatory impacts that weigh on the company’s near-term outlook.

Based on the notional gains, valuation downside and price action stance, a "Sell" recommendation on Eli Lilly and Company (NYSE: LLY) has been given at the closing market price of USD 1,109.94 as on 25 November 2025.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 25 November 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.