Eli Lilly shares are down 6% Tuesday and on pace for their worst day since February after an HSBC downgrade. The crux of HSBC’s call: Wall Street is too optimistic about the size of the GLP-1 obesity market. The firm’s analysts project it to be between $80 billion and $120 billion in 2032, compared with the current consensus north of $150 billion. They also argued that price competition in the GLP-1 market is “likely to be significant,” though they note that Lilly’s 2026 guidance implies the company will see enough volume growth to overcome pricing headwinds tied to its agreement with the Trump administration . In that agreement, unveiled in November, Lilly agreed to cut prices on some of its obesity drugs in exchange for access to Medicare. Additionally, the analysts said they are concerned that Eli Lilly’s reliance on people buying the drugs out of pocket — rather than through a health insurance plan — could become a problem if the U.S. economy hits a rough patch and middle-class people have less money to spend on GLP-1 drugs. They even mentioned the possibility of AI-driven disruption to white-collar jobs. HSBC acknowledged that right now Lilly’s strength in the cash-pay market is an advantage over struggling rival Novo, but they’re essentially saying it may not always be welcome exposure. Another of HSBC’s worries is that Lilly’s looming obesity pill may prove a long-term disappointment if patients do not stick to the medication. “We think that the market’s assumed compliance and persistence on oral is inconsistent with the discontinuation rates in clinical trials,” they wrote. “On balance, we do not like the risk/reward balance in Lilly shares,” they added. LLY 1Y mountain Eli Lilly’s stock performance over the past 12 months. It’s difficult to refute some of HSBC’s long-term concerns at this very moment, given that evidence of adherence to the obesity pill and of cyclicality in the cash-pay market is based on future assumptions. At the same time, there is some merit to price-war concerns and we’ve previously acknowledged them as a risk to monitor. But the way we see it, HSBC is about as bearish on the GLP-1 market as we’ve seen lately. So, this is definitely an out-of-consensus call. Our view continues to be that Lilly’s pill will be a major hit because it delivers meaningful weight loss without any restrictions on food and water intake, and a needle-free GLP-1 option will appeal to a broader group of people. The FDA is expected to clear Lilly’s obesity pill, known as orforglipron, next month. Novo was first to market with a GLP-1 for obesity in January, branded as the Wegovy pill, and it’s been a rare bright spot for the Danish drugmaker. We’ve also been believers that the insurance coverage for GLP-1s will continue to increase over time, as it becomes more apparent that they improve patients’ health in other areas, like helping to prevent cardiovascular disease. Trials from Lilly and Novo, for that matter, have repeatedly shown these drugs deliver benefits beyond shedding pounds. The more insurance coverage there is, the less reliance there should be on the cash-pay market. (Jim Cramer’s Charitable Trust is long LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.