Eli Lilly Shares Extend Decline Amid Pricing Strategy Concerns

Eli Lilly & Co. finds its stock under sustained pressure, having now closed lower for seven consecutive trading sessions. This week alone, the pharmaceutical giant's equity shed nearly 8 percent of its value. The persistent selling appears directly linked to investor apprehension over the company's recent, aggressive price reduction for its weight-loss drug, Zepbound.

In a bid to expand patient access, Eli Lilly announced it would offer single-dose vials of Zepbound at significantly reduced prices through its LillyDirect platform. The new pricing is set at $299 per month for the 2.5-mg version and $399 for the 5-mg dose. This initiative, developed in coordination with the White House and Health Secretary Robert F. Kennedy Jr., primarily targets self-paying patients and those on Medicare.

However, the market's reaction has been decidedly skeptical. Rather than applauding the potential for expanded market reach, shareholders are concerned the steep discounts will severely compress profit margins. These fears persist despite expectations for a substantial increase in prescription volume. The overarching uncertainty regarding the blockbuster drug's profitability outlook by 2026 continues to weigh heavily on sentiment.

Analyst Outlook Provides a Counterpoint

Not all market observers share this pessimistic view. In a contrasting assessment, BMO Capital reaffirmed its "Outperform" rating on Eli Lilly shares on Friday and raised its price target to $1,200. Analysts at the firm argue that the improved drug accessibility will drive volume growth sufficiently robust to more than offset the impact of the price cuts.

Should investors sell immediately? Or is it worth buying Eli Lilly?

Regulatory Milestone Fails to Stir Market

Amid the focus on Zepbound, a significant regulatory achievement for the company garnered little attention. The U.S. Food and Drug Administration (FDA) granted full approval for Eli Lilly's cancer therapy, Jaypirca (pirtobrutinib), for treating chronic lymphocytic leukemia. This marks another advancement in the firm's oncology pipeline, yet the news was virtually lost in the current market environment and failed to provide any meaningful support to the stock price.

Technical Support Level in Focus

The equity now trades around $1,009, hovering just above the psychologically significant $1,000 threshold. A decisive break below this support level could trigger further technical selling. Interestingly, the Relative Strength Index (RSI) suggests the stock is already in oversold territory, indicating that a technical rebound may be overdue.

All eyes now turn to the quarterly earnings report scheduled for early February. This release is seen as crucial, as investors expect management to provide concrete data on how the new pricing strategy is affecting gross margins. Until those figures are disclosed, the shares are likely to remain vulnerable to continued volatility.