1 Super Stock Down More Than 20% to Buy Hand Over Fist, According to Wall Street

Key Points

• Eli Lilly's once high-flying stock has fallen for several reasons.

• However, Wall Street remains decidedly bullish about the pharma stock.

• This optimism appears to be warranted.

• 10 stocks we like better than Eli Lilly ›

For a while, it seemed that nothing could go wrong for Eli Lilly (NYSE: LLY). Surging sales for Lilly's type 2 diabetes drug Mounjaro and great expectations for its obesity drug Zepbound fueled massive gains for the pharma stock.

Along the way, Lilly became the largest healthcare company on the planet based on market cap. However, the story hasn't been so great for the drugmaker since last summer. Its share price remains more than 20% below the peak set in August 2025. Should investors bail on the once high-flying stock? Not according to Wall Street.

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Behind Lilly's sell-off

We can't pin the blame on Lilly's steep share price decline on just one factor. There are several reasons behind the big pharma stock's sell-off over the last 14 months or so.

Investors have become concerned about increasing competition for Lilly in the obesity drug market. Those concerns were exacerbated last year when Roche (OTC: RHHBY) reported encouraging clinical results from a phase 1 study evaluating oral GLP-1 receptor agonist CT-996.

To make matters worse, Lilly's recent quarterly updates haven't been all that reassuring. For example, in the first quarter of 2025, the company lowered its earnings outlook. This followed lower-than-expected sales for Mounjaro and Zepbound in the previous two quarters.

The company's results from the first of two pivotal phase 3 studies for oral GLP-1 drug orforglipron also raised eyebrows. While the highest dose of the experimental drug helped patients achieve placebo-adjusted weight loss of 11.5%, that wasn't quite enough to meet analysts' expectations. Some were also unhappy with the treatment discontinuation rate due to adverse events of 10.3% for the 36 milligram dose of orforglipron compared with only 2.6% for placebo.

President Trump has added to worries about Lilly, too. His administration appears likely to implement steep tariffs on pharmaceutical imports to the U.S. Lilly CEO Dave Ricks told analysts in his company's Q1 earnings call earlier this year that increased tariffs "would have a negative effect on Lilly and for our industry."

What Wall Street thinks

Despite all of this bad news, Wall Street remains decidedly bullish about Eli Lilly. Analysts' optimism shows up in two ways.

Image source: Getty Images.

First, 20 of the 28 analysts surveyed by S&P Global (NYSE: SPGI) in September who cover Lilly rated the stock as a "buy" or "strong buy." The other eight analysts recommended holding the pharma stock. Notably, just a couple of months ago, two analysts thought investors should sell Lilly's shares. There were no "sell" recommendations in S&P Global's survey this month.

Second, the average 12-month price target for Lilly reflects an upside potential of around 19%. Some analysts are much more bullish than that, though. For example, Citigroup (NYSE: C) projects that Lilly's shares could soar nearly 59% over the next 12 months. JPMorgan Chase (NYSE: JPM), Morgan Stanley (NYSE: MS), and Wells Fargo (NYSE: WFC) analysts think the stock could jump at least 46% higher.

Are analysts right about Lilly?

I don't know if Lilly's stock will deliver the gains that many analysts predict over the next 12 months. However, I agree with the overall positive outlook for the stock.

Mounjaro and Zepbound still have significant sales growth potential. That's especially the case with the former showing promise in delivering cardiovascular benefit in a phase 3 study.

My hunch is that orforglipron will still be a huge commercial success for Lilly despite the concerns raised by the results from the late-stage study. Many overweight individuals would like the option of an effective oral medication, in my opinion.

I also like seeing the recent insider buying from Ricks and others. When key executives and board members are aggressively buying shares, it usually reflects a high level of confidence in the company's future. This insider buying makes me more confident about Lilly's future, too.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and S&P Global. The Motley Fool recommends Roche Holding AG. The Motley Fool has a disclosure policy.