HSBC Downgrades Eli Lilly to Reduce, Cuts Target to $850

Eli Lilly and Company shares fell in early trading on Tuesday after HSBC analysts downgraded the pharmaceutical giant's stock from Hold to Reduce, slashing their price target from $1,070 to $850. The move, which marks the only sell rating among 38 analysts covering the company according to Bloomberg data, highlights concerns that the stock's recent gains have outpaced realistic growth prospects in the booming obesity drug market.

The downgrade came as Eli Lilly's shares, which closed at $989 on Monday, traded around $972.51 following the announcement, a decline of about 1.6 percent. Over the past 12 months, the stock has surged more than 20 percent, far outperforming rival Novo Nordisk, whose shares have dropped 52 percent in the same period. This rally has positioned Eli Lilly as a leader in the weight-loss pharmaceutical sector, driven by strong sales of its GLP-1 treatments Mounjaro and Zepbound, which generated billions in revenue last year.

HSBC analyst Rajesh Kumar cited three main factors behind the bearish outlook. First, the bank sharply reduced its forecast for the total addressable market of obesity medications to between $80 billion and $120 billion by 2032, well...