Erste Group has downgraded Eli Lilly from Buy to Hold, citing a tempered earnings outlook for 2025. The company now expects earnings per share between $20.20 and $21.70, a signal that management is bracing for more modest growth ahead. This recalibration follows a strong rally in the stock, leaving little room for upside under the new projections.
📊 One of the key concerns lies in the company’s inventory and receivables trends. Both the inventory-to-sales and receivables-to-sales ratios are at their highest levels in over six years. This could mean distributors are well-stocked, potentially signaling slower demand or delayed reorder cycles in the near term.
💸 Despite the downgrade, Eli Lilly remains committed to returning capital to shareholders. It recently declared a quarterly dividend of $1.50 per share, or $6.00 annually, representing a yield of 0.78%. With a dividend payout ratio near 49%, the company maintains a healthy balance between income distribution and reinvestment.
🔬 While the pharmaceutical giant still commands a robust pipeline and strong demand for key treatments, the revised forecasts and elevated inventory metrics are prompting a more cautious near-term stance. Investors may want to wait for more visibility on growth trajectories before adding to positions.