LLY Stock Clings To 200-DMA As Sell-off Deepens: Retail Eyes ‘Positioning' Play Ahead Of Q1 Earnings Next Week

• Guggenheim sees a 31% upside, while Morgan Stanley expects the stock to climb 47% from current levels, according to The Fly.
• Last week, Reuters reported that initial uptake for Lilly’s newly approved diabetes pill Foundayo was lower than Novo’s Wegovy.
• Earlier this week, Lilly signed an agreement to acquire Kelonia Therapeutics for $7 billion to strengthen its oncology pipeline.

Shares of Eli Lilly & Co. (LLY) fell nearly 2% in pre-market trading on Friday and have been under pressure since early March, but the stock continues to find strong technical support at its 200-day moving average, raising the question if a rebound is around the corner.

LLY shares are also on track to post a sixth weekly loss in the last eight weeks.

Source: TradingView

Q1 Results In Focus As Analysts See Significant Upside

The focus shifts to its upcoming earnings on April 30. According to Fiscal.ai data, the pharmaceutical stalwart is expected to post a 38% surge in Q1 revenue to $17.61 billion, and earnings of $6.87 per share, compared to $3.34 per share last year. The company has posted a revenue increase in each of the last three quarters.

Earlier this week, Guggenheim raised its price target on Eli Lilly to $1,183 from $1,163 and reiterated a ‘Buy’ rating, according to The Fly. This represents a 31% upside from current levels. The firm said it updated its model ahead of Lilly’s first-quarter (Q1) results following the recent acquisitions of Centessa Pharmaceuticals and Kelonia Therapeutics.

Prior to that, Morgan Stanley raised its price target to $1,327 from $1,313, representing a 47% upside, and maintained an ‘Overweight’ rating, as it updated its models across biopharma coverage to reflect IQVIA trends and intra-quarter developments ahead of the upcoming Q1 earnings.

Retail Sees Momentum Ahead Of Earnings

Retail sentiment on Stocktwits has remained ‘bullish’ over the past 24-hours, amid ‘high’ message volumes.

One user called it a ‘positioning’ play ahead of a key catalyst, but if momentum picks up early, the stock could move ahead of the earnings.

Another user expects a “nice run-up” ahead of earnings.

Foundayo’s Initial Uptake Trails Wegovy

Bloomberg reports that Lilly’s new weight loss pill is seeing a muted early rollout, a precursor of the uphill battle it faces against rival Novo Nordisk. The drug has reportedly recorded 3,707 prescriptions in its second week, according to IQVIA data cited by RBC Capital Markets.

Lilly’s Oncology Boost

Earlier this week, Lilly signed an agreement to acquire Kelonia Therapeutics for $7 billion to strengthen its oncology pipeline. The move builds on Lilly’s broader push into cell therapy, following its February agreement to buy Orna Therapeutics for to $2.4 billion.

The latest acquisition is expected to enhance Lilly’s cancer portfolio, which already includes treatments like Jaypirca and Verzenio.

The stock is down nearly 15% so far this year.

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