01:57 PM EDT, 10/31/2024 (MT Newswires) -- Eli Lilly ( LLY ) is well-positioned for growth through 2024 and into 2025 despite the lower-than-expected Q3 sales for diabetes and obesity drugs Mounjaro and Zepbound, UBS said in a note emailed Thursday.

Mounjaro sales dropped 17% in Q3, while Zepbound saw a staggering 27% decline, but underlying demand for these products remains strong, UBS said.

"This miss was driven by destocking for both products (mid-single-digit of US sales), as wholesalers navigated handling of high-volume cold chain products across various doses following significant stocking in [Q2]," UBS said in the note.

Eli Lilly ( LLY ) is expected to meet its Q4 revenue target due to potential restocking, increased demand, and label expansion for Mounjaro, UBS said, adding that the obesity market remains underpenetrated.

Eli Lilly ( LLY ) is expected to see significant growth in 2025, driven by strong sequential sales of Mounjaro and Zepbound, with increased marketing efforts and label expansion likely to boost sales further, while the company maintains robust profit margins despite rising operational expenses, UBS said.

Following the Q3 results, UBS updated its forecasts, expecting 2024 and 2025 revenue of $45.9 billion and $58.4 billion, respectively, and EPS of $13.27 and $23.37, respectively, down from prior estimates of $46.4 billion and $57.2 billion, and $13.34 and $22.70.

UBS reiterated its buy rating on Eli Lilly ( LLY ) with a 12-month price target of $1,100.

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