By Josh Nathan-Kazis and Elsa Ohlen

Eli Lilly stock was falling early Thursday even as the drugmaker posted first-quarter earnings that beat analysts' expectations. The market may be concerned by the company's decision to cut its profit guidance for the year.

Adjusted earnings for the March quarter came in at $3.34 a share on sales of $12.7 billion, while analysts had expected $3.26 a share on sales of $12.7 billion, according to FactSet.

Still, shares fell 3.8% to $865 in premarket trading Thursday.

It now sees 2025 adjusted earnings of between $20.78 and $22.28. It had previously told investors to expect earnings of between $22.50 and $24 a share. The company reiterated its revenue guidance of between $58 billion and $61 billion.

Sales of Mounjaro and Zepbound, its best-selling blockbuster drugs, were $3.8 billion and $2.3 billion in the quarter, respectively, in line with analysts' expectations.

"Lilly had a solid start to the year, with 45% year-over-year revenue growth driven by strong sales of Mounjaro and Zepbound," said CEO David A. Ricks.

U.S.-listed shares of Lilly's main competitor and Ozempic-maker Danish Novo Nordisk rose 3% in premarket trading

This is breaking news. Read a preview of Eli Lilly below and check back for more analysis soon.

Eli Lilly, virtually alone among its large-cap pharma peers, has been having an excellent year. The stock is up by a double-digit percentage since the start of 2025, its market value is the largest in the healthcare sector, and it looks increasingly as though it has the weight-loss market firmly in hand.

All that means that when the company reports its first-quarter results on Thursday, investors' focus will be less on the business than on rising external risks, particularly the sector-specific drug tariffs President Donald Trump has promised are on their way.

The consensus call among analysts tracked by FactSet is that Lilly will report a profit of $3.26 a share from sales of $12.7 billion. The stock is up 16% so far this year, and 16% over the past 12 months.

The company is coming off a hot streak. On April 17, Lilly reported strong results for an experimental weight-loss pill, orforglipron, sending shares up 14% in a single day. Novo Nordisk, its main rival in weight-loss drugs, has reported disappointing data on its next-generation obesity shot. Its shares are down 49% over the past year.

The emerging narrative on Wall Street is that Lilly, not Novo, will be the long-term winner in the obesity market.

"They are so well positioned, with a fortress around manufacturing, with rebate walls, it has first mover advantage and an early mover advantage" in coming therapies that could disrupt the market, Goldman Sachs analyst Asad Haider told Barron's in mid-April . "When we modeled this out, it was hard for us to come up with a view where we see competitors leapfrogging them."

The company has told investors to expect non-GAAP EPS of between $22.50 and $24 for the 2025 fiscal year. It says revenue will be between $58 billion and $61 billion.

The questions now relate to the economic environment, and how the company expects to be affected by the pharmaceutical tariffs Trump has promised. On a call Pfizer held with investors on Tuesday, CEO Albert Bourla said he didn't think the levies would be damaging.

"We are engaging and we have very productive discussions with all the secretaries that are involved, and the White House staff that are involved," Bourla said. "I'm cautiously optimistic."

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

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May 01, 2025 07:06 ET (11:06 GMT)

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