Here's What Dragged Eli Lilly and Company (LLY) Down in Q2

PGIM, an investment management company, released its “PGIM Jennison Health Sciences Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equities in the second quarter of 2025 experienced significant volatility, as the steep sell-off that initiated at the beginning of the quarter ultimately led to a strong recovery. The S&P 1500 Health Care Index declined 6.9% in the second quarter, underperforming the S&P 500’s 10.9% return. Health care providers & services, life sciences tools & services, biotechnology, and pharmaceuticals underperformed the Index in the quarter. While healthcare technology and medtech gained in the quarter. In June, the S&P 1500 Health Care Index (the Index) gained 1.9%, lagging the S&P 500, which advanced 5.1%. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, PGIM Jennison Health Sciences Fund highlighted stocks such as Eli Lilly and Company (NYSE:LLY). Eli Lilly and Company (NYSE:LLY) is a pharmaceutical company headquartered in Indianapolis, Indiana. The one-month return of Eli Lilly and Company (NYSE:LLY) was 0.56%, and its shares lost 19.05% of their value over the last 52 weeks. On September 24, 2025, Eli Lilly and Company (NYSE:LLY) stock closed at $741.85 per share, with a market capitalization of $660.42 billion.

PGIM Jennison Health Sciences Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its second quarter 2025 investor letter:

"Eli Lilly and Company (NYSE:LLY) is a diversified biopharmaceutical company with core franchises in Diabetes, Obesity, Immunology, Neurodegeneration, and Oncology. The Company is one of the two global leaders in diabetes with tirzepatide now the strongest ever launch in diabetes and obesity under the Mounjaro and Zepbound brand names. LLY also has exciting franchises in neurology, immunology, and oncology that are starting to add meaningfully to growth. With a proven history of strong commercial execution and one of the highest Research and Development (R&D) success rates in the industry, we see opportunity for continued success. With a lack of meaningful patent expirations for the rest of the decade, LLY is uniquely positioned amongst its larger-cap peers. Eli Lilly’s recent quarter was largely as expected, with a minor U.S. Mounjaro sales miss offset by strong Zepbound performance and robust international Mounjaro growth, resulting in an overall small beat for the tirzepatide franchise. Prescription trends are increasingly predictive of Lilly’s results, which should reduce the quarter-to-quarter volatility seen last year. The company did not raise guidance, reflecting caution after prior guidance missteps and ongoing uncertainties this year, but quarterly margins and Earnings Per Share (EPS) exceeded expectations and a modest reduction in full year EPS guidance was purely driven by the accounting treatment of acquired in-process R&D (acquisitions of small pipeline-stage biotechs). Lilly also maintained its year-end 2024 foreign exchange assumptions in guidance, not factoring in any benefit from recent dollar weakness, setting them up for a guidance raise at midyear on both these fundamental and technical points. May stock weakness was an overreaction to the announcement of a closed formulary favoring Wegovy for a small part of CVS Caremark's book of Pharmacy Benefit Management (PBM) business, triggering investor fears of a price war in GLP-1s. It is now clear that fear was misplaced, CVS is truly a one-off, and with continued strong growth in volumes, we expect LLY to continue recovering from this sell-off."

Eli Lilly and Company (NYSE:LLY) is in 21st position on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 119 hedge fund portfolios held Eli Lilly and Company (NYSE:LLY) at the end of the second quarter, same as 119 in the previous quarter. Eli Lilly and Company’s (NYSE:LLY) second quarter revenue grew 38% compared to Q2 2024, driven by its key products. While we acknowledge the potential of Eli Lilly and Company (NYSE:LLY) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Eli Lilly and Company (NYSE:LLY) and shared the list of best AI stocks to buy according to Goldman Sachs. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.