Eli Lilly’s lead in the obesity race has expanded. But its recent share price performance has been different.

Eli Lilly and Co. investors have received some really good news in recent months, but the stock’s performance has been a notable exception. On Wednesday, Eli Lilly and Co’s shares were down nearly 9% since the close on Oct. 30, a day after the drugmaker’s confusing third-quarter earnings report sent shares down 6%. Narrowing the scope further to include the hit to earnings, the only club name to perform worse than Eli Lilly over the past six months is Constellation Brands, down nearly 15% and 16%, respectively. Stocks — even ones like Eli Lilly and Co. that have beaten the S&P 500 every year for the past five years — go through tough times from time to time. Eli Lilly’s meager results of late are notable because in the interim, the company’s position in the fierce and lucrative race for obesity drugs has grown stronger. In late November, hopeful challenger Amgen reported disappointing interim trial results for its experimental obesity treatment MariTide. Then on Dec. 20, shares of Wegovy maker Novo Nordisk, Eli Lilly’s main weight-loss drug rival, took a hit after weaker-than-expected data for next-generation obesity treatment CagriSema. Sandwiched in between updates from peers were results from Eli Lilly’s own trial on Dec. 4, which showed its obesity drug Zepbound beat Wegovy in the first comparative study. LLY Eli Lilly and Company 1Y mountain stock over the past 12 months. Competitive threats in the fast-growing obesity market, which some Wall Street figures predict will reach $100 billion annually by the end of the decade, has loomed over Eli Lilly even during its recent success. Although the stock has gained about 3% since the trading day leading up to Amgen’s news, why haven’t these positive developments translated into more upside? Analysts say the answer lies in concerns about Eli Lilly’s fourth-quarter earnings report due in early February. “We believe recent LLY stock action and investor conversations point to issues with fourth-quarter results and 2025 guidance,” Morgan Stanley analysts wrote in a note to clients this week. Analysts noted that An Incorporated and Novo Nordisk underperformed after their respective trial updates, contrasting those with Eli Lilly’s trading. Morgan Stanley believes Eli Lilly’s stock “would have performed more significantly” were it not for uncertainty about results and guidance. Analysts at JPMorgan Chase called the fourth-quarter developments “the cliffhanger in the story” for Eli Lilly. Both research firms lowered their U.S. quarterly revenue forecasts for Eli Lilly’s most important product, tezepatide, marketed as “Zepbound” (a treatment for obesity) and “Mounjaro” (a treatment for type 2 diabetes). Morgan Stanley expects U.S. sales of $5.3 billion, down from a previous estimate of $6 billion, due to recent trends in prescription data. JPMorgan’s model projects total U.S. revenue at $5 billion. “There are already expectations that fourth-quarter sales of tissipatide may be below consensus,” Morgan Stanley wrote. The bottom line, though, is that Morgan Stanley and J.P. Morgan are optimistic about Eli Lilly’s long-term His attitude did not waver, and he reiterated his buy-equal rating on the stock. Neither are we. We also rate Eli Lilly and Company shares the equivalent of a Buy rating of 1. The reality, however, is that the stock may struggle to sustain its gains until the company reports numbers and provides an official 2025 outlook before the market close on February 6. If the outlook for 2025 is encouraging, investors may overlook fourth-quarter missteps. The supply of Zepbound and Mounjaro is considered a major factor in Eli Lilly’s financial success this year. The influential J.P. Morgan Healthcare Conference kicks off next week in San Francisco, providing an opportunity to improve market sentiment ahead of earnings reports. CEO David Ricks plans to participate in a “fireside chat” on Tuesday at 5:15 pm ET. Ricks’ comments at the conference a year ago were more focused on big-picture opportunities rather than near-term financial updates, but investors still liked what he had to say as the stock jumped to a then-all-time high in the ensuing session. . The CEO also has a lot of good things to say this time around, even if recent stock charts suggest otherwise. (Jim Cramer’s Charitable Trust is long LLY. See here for the full list of stocks.) As a subscriber to Jim Cramer’s CNBC Investing Club, you’ll get Jim Cramer receives trade alerts before placing a trade. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. 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Eli Lilly & Co. Zepbound Injection Pen, March 28, 2024.

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Eli Lilly and Company Investors have received some truly good news in recent months, but the stock’s performance has been a notable exception.