HSBC cuts biotech stocks: Eli Lilly lowered to Reduce

April 29, 2025 02:27 AM AEST | By Investing

Google News:

HSBC cuts biotech stocks: Eli Lilly lowered to Reduce

Recent News

Resolution Minerals (ASX:RML) Nears U.S. OTCQB Listing to Expand Inves...

Kalkine: ASX Starts Flat as Energy and Gold Stocks Shine, Retail Lags

Kalkine: Accent Group (ASX:AX1) Faces Share Slump as FY25 Guidance Fla...

Kalkine: Livium (ASX:LVM) Eyes Rare Earth Recycling to Bolster Circula...

Investing.com -- HSBC downgraded several major biotech names this week, citing macroeconomic sensitivities, tariff risks, and growing pressure from regulatory changes. Most notably, the bank downgraded Lilly to Reduce from Buy.

The firm said the risk-reward for Eli Lilly (NYSE:LLY) is "not attractive," especially given uncertainties surrounding the future growth of its obesity drug franchise.

HSBC noted, "We are not certain that is the case for Lilly" regarding continued script momentum as market dynamics shift.

Broader concerns also weighed on HSBC’s view of the sector. The analysts pointed out that "the confluence of first-time US tariffs risks combined with a large patent cliff and Part D/IRA headwind might create some pressure on earnings this time."

Their proprietary analysis found that "innovative pharma could face earnings headwinds of roughly c6-14% if a 25% US tariff were applied."

HSBC also flagged risks from changes to Medicare’s Part D program, warning, "Part D earnings risk in H2’25 is less well understood, we contend," and that "there is little precedent of manufacturers sharing the cost burden in the catastrophic phase."

While the firm acknowledged that "current sector multiples (growth-adjusted) reflect close to recessionary levels," they remained cautious, emphasizing forensic accounting checks to monitor the situation.

In addition to downgrading Eli Lilly, HSBC cut ratings on Roche and Biogen (NASDAQ:BIIB) to Hold and maintained Reduce ratings on GSK and Novartis (SIX:NOVN).

They said they prefer "Buy-rated growth names (Novo, Astra, and UCB), GARP ideas (Abbvie, Sanofi (EPA:SASY) (NASDAQ:SNY)), and defensive stocks (J&J (NYSE:JNJ))" in the current environment.

This article first appeared in Investing.com

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.