Analyst Note
| Damien Conover, CFA |Eli Lilly reported weak second-quarter results slightly below our projections, but we do not expect any major changes to our fair value estimate based on the minor shortfall. Importantly, older drugs drove most of the weakness, while most of the key recently launched drugs continue to post steady gains. These next-generation drugs are the most important factor supporting Lilly’s wide moat. While these newer drugs are posting strong gains, we continue to view the stock as moderately overvalued, with the market expecting near-perfect launches and excellent late-stage development (especially from phase 3 Alzheimer’s drug donanemab).