Why Eli Lilly Stock Just Dropped

By Rich Smith – Mar 17, 2026 at 12:56PM ESTKey PointsHSBC analyst Rajesh Kumar downgraded Lilly stock to reduce this morning.Kumar believes GLP-1 demand, as measured in dollars, could be as little as half what other analysts forecast.Eli Lilly (LLY 6.41%) stock tumbled 5% through noon ET Tuesday. You can blame investment bank HSBC for that. HSBC, you see, just downgraded Lilly stock to sell. Image source: Getty Images. What HSBC just said about Eli Lilly stock Well, technically, the word HSBC used was "reduce," but it amounts to the same sentiment. Most analysts forecast a total addressable market (TAM) for obesity drugs such as Novo Nordisk's (NVO 0.31%) Ozempic, and Lilly's Zepbound at over $150 billion. HSBC analyst Rajesh Kumar, however, thinks this number is optimistic. Looking as far out as 2032, he sees GLP-1 weight-loss drugs generating only $80 billion to $120 billion in annual revenue. One problem with other analysts' predictions is that, although GLP-1 drugs fetch rich prices, these prices are falling, and future "price competition is likely to be significant." Another is that not all patients who start taking GLP-1 drugs will continue taking them, as shown by clinical trial discontinuation rates. Already in 2025 and 2026, we've seen multiple rounds of price cuts between the two big GLP-1 companies. Lilly's guidance suggests the company plans to make up the price cuts on volume, so to speak, to keep growth going -- but Kumar isn't convinced. (Nor am I.) ExpandNYSE: LLYEli LillyToday's Change(-6.41%) $-63.37Current Price$925.75Key Data PointsMarket Cap$935BDay's Range$925.75 - $985.0052wk Range$623.78 - $1133.95Volume245KAvg Vol3.1MGross Margin83.04%Dividend Yield0.63% What this means for Eli Lilly investors Priced at 43 times trailing earnings, and more than twice that when valued on free cash flow (Lilly claims net earnings much bigger than its actual cash profits), Eli Lilly's valuation depends greatly on its growth rate. Analysts polled by S&P Global Market Intelligence, though, see earnings growing 22% or less annually over the next five years. Even assuming that's correct, the stock looks richly valued to me. If Kumar is right, Lilly stock could be even more expensive than it looks.Read NextMar 16, 2026 •By David Jagielski, CPAIs There Too Much Bullishness Priced Into Eli Lilly's Stock Price?Mar 13, 2026 •By Prosper Junior BakinyIs Eli Lilly's Weight Loss Empire in Trouble?Mar 11, 2026 •By Prosper Junior BakinyForget Oral Wegovy: This Weight Loss Drug Could Be an Even Bigger WinnerMar 9, 2026 •By David Jagielski, CPAShould You Buy Eli Lilly Stock Now or Wait for More of a Pullback?Mar 8, 2026 •By Reuben Gregg Brewer1 Dividend Stock to Buy Hand Over Fist and 1 to AvoidMar 7, 2026 •By Reuben Gregg BrewerWhere Will Eli Lilly Stock Be in 10 Years?About the AuthorRich Smith is a contributing Motley Fool defense and stock market analyst covering publicly traded and emerging companies in defense, space, aerospace, and other sectors. Prior to The Motley Fool, Rich practiced international corporate law for Clifford Chance in Russia, and for the Russian-Ukrainian Legal Group in Moscow, Kyiv, and Washington, D.C. He holds a bachelor’s degree in international relations from the College of William & Mary, a law degree from the University of Baltimore, and a language certification from the International Institute of Russian Language & Culture in Tver, Russian Federation. The Globe and Mail once featured him as “one of the best stock pickers since 2009.”TMFDittyX@RichSmithFoolStocks MentionedEli LillyNYSE: LLY$930.56(-5.92%)-$58.56Novo NordiskNYSE: NVO$38.46(-0.31%)-$0.12*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.