Eli Lilly (LLY 2.49%) stock slipped 2.5% through 10:15 a.m. ET Tuesday -- despite receiving positive press from Wall Street analysts this morning.
UBS analyst Michael Yee just reiterated his buy rating on the GLP-1 drug company today. Interestingly, the reason he doubled down on Eli Lilly... has nothing at all to do with diet drugs.
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Why Wall Street loves Lilly
So what does this Wall Street analyst like about Lilly? Yesterday, Eli Lilly announced it will spend $7 billion to acquire privately held Kelonia Therapeutics and its KLN-1010 CAR-T gene therapy drug for treating cancer, which is currently in Phase 1 trials.
Investors didn't love the news, bidding down Lilly by about 1% yesterday, and another 2.5% today, but Yee thinks this is a smart move to help diversify Lilly away from its growing dependence on GLP-1 revenue.
CAR-T gene therapy holds promise for treating both cancer and autoimmune disease, says Yee, and Lilly has been snapping up small players in the space, acquiring Orna Therapeutics for $2.4 billion in February for example. Reuters at the time noted that Lilly is attempting to "diversify beyond obesity."
NYSE: LLY
Key Data Points
What comes next for Lilly stock
This seems to me a smart move.
Consider: Since the advent of the Ozempic revolution, Lilly's revenue has soared. 2025 revenue was $65.2 billion, up from just $28.5 billion in 2022. Lilly's profits from GLP-1 drugs have done even better, more than tripling over the same time span, to $20.6 billion.
Nothing lasts forever, however, and GLP-1 prices are falling even as new competitors enter the field. It makes sense for Lilly to invest some of its GLP cash in new products that can help it evolve and (hopefully) invent the next big thing: curing cancer.
