Eli Lilly and Company has given back a sliver of its remarkable May recovery, closing at $1,064 on June 2 — down 1.7% on the day but virtually unchanged on the week, as fresh safety questions around newly launched Foundayo inject a new variable into a stock that had been riding deal momentum and analyst upgrades.
The options market captures the shift in tone precisely. Put/call ratio has eased to 1.08, half a standard deviation below its 20-day average of 1.10 — which itself has been running well above 1.0 throughout May, reflecting a persistent preference for downside protection even as the stock recovered. That elevated baseline PCR tells the more important story: options traders have been structurally more defensive on Lilly all month, even as the price climbed 10% from May's lows. The 52-week range on the PCR runs from 0.51 to 1.37, so current levels sit comfortably in the cautious half of that band without screaming alarm.
Short interest is not the story here. Shorts amount to less than 1% of the free float — 0.92% to be precise — and the borrow market is as relaxed as it gets. Cost to borrow is barely above 0.47%, down from a recent high near 0.65% in mid-May. Availability is effectively unlimited, with hundreds of millions of shares available to lend. The 8% week-on-week uptick in shares short is worth noting, but the absolute level is too small to read as meaningful directional pressure. This is not a name where short positioning is driving price.
The real debate is on the Street, and it is notably one-sided in terms of direction. Every analyst action in the recent file maintains a Buy or Outperform rating. BofA lifted its target to $1,251 last week, Morgan Stanley raised to $1,327 in April, and Barclays pushed to $1,400 — the most bullish target in the group — following the Q1 blowout. The mean target of $1,215 implies roughly 14% upside from current levels. The lone exception is HSBC, which downgraded to Reduce in March with an $850 target — a significant outlier that reflects a genuinely different view on risk, rather than just a valuation disagreement. The bear case now has a sharper edge: the recently launched Foundayo is drawing scrutiny on both safety and competitive grounds, with bears noting it trails Oral Wegovy in the obesity market. Bulls counter with the breadth of the pipeline — oncology, immunology, cardiometabolic — and Lilly's deal activity, which included $5 billion-plus in licensing and acquisitions announced in the first week of June alone. EPS momentum ranks in the 78th percentile and EPS surprise in the 78th, underpinning the fundamental case, while the quality pillar of the ORTEX stock score is anchored by a maximum Piotroski f-score and ROA near 20%. The drag is squarely in value: at roughly 27x earnings and 15x book, Lilly is priced for continued execution.
The earnings history provides useful framing for the next catalyst. The April 30 Q1 print produced the largest single-session move in recent memory — a 13% gap — and the stock extended gains another 14.5% over the following five days. The May 4 follow-through added a further 2.7%. That sequence is what drove the recovery from mid-$800s to over $1,100 by month-end. The next scheduled print is August 5. Between now and then, the question of whether Foundayo's safety profile holds up under real-world scrutiny — and whether Lilly's deal pipeline produces any further newsflow — is what traders will be watching most closely.
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