Eli Lilly stock sank after its second-quarter report due to underwhelming results for a key weight loss drug in its pipeline.
Eli Lilly actually posted strong sales and earnings results in Q2 and raised its full-year sales outlook.
The stock has put up impressive returns over the last five years, and shares could be a good buy after recent sell-offs.
Eli Lilly (NYSE: LLY) reported its second-quarter results earlier this month, and saw a substantial sell-off in conjunction with the report. Despite posting strong sales and earnings results in Q2 and raising its full-year outlook, disappointing clinical results for the key oral weight loss drug in the company's pipeline prompted a substantial valuation pullback.
While Eli Lilly's share price has stumbled recently, the stock has actually been a huge winner over the last five years. Read on for a look at what a $1,000 investment in the company a half-decade ago would be worth today -- and for a look at what's on the horizon for the business.
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Over the past five years, Eli Lilly stock has risen roughly 320% as of market close Aug. 11. Meanwhile, the company has delivered a dividend-adjusted total return of roughly 347% over the last five years. After factoring in the added benefits of the company's dividend, a $1,000 investment made in Eli Lilly stock would now be worth roughly $4,472.
Eli Lilly's recent stock pullback stems from relatively disappointing trial data for its orally administered Orforglipron weight loss drug. Orforglipron proved to be more effective than the placebo benchmark over the 18-month trial period, but clinical data suggested that it was significantly less effective than the company's injected Zepbound treatment. On the other hand, the company still looks to have a strong position in the obesity treatment market even if it takes some time to make progress with the efficacy of orally administered treatments.
Following Eli Lilly's strong sales and earnings results in the second quarter and raising its full-year sales guidance from between $58 billion and $61 billion to between $60 billion and $62 billion, the stock deserves a close look from long-term investors right now. While the stock could continue to see valuation volatility in conjunction with the outlook for its weight loss drug pipeline, the recent pullback could be a buying opportunity.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.