Stop us if you've heard this one before: As Eli Lilly ( LLY) prepares to issue another financial report, analysts are wondering if pipeline prospects outweigh questions about current products.

Alas, this balancing act is becoming an uncomfortable quarterly event for Lilly, whose stock has been cruising closer to a 52-week low of $50.34 than the high of $60.98. The shares closed at $52.62 Friday.

Analysts polled by Thomson First Call expect earnings of $772.3 million, or 71 cents a share, on revenue of $3.62 billion for the third-quarter report that will be unveiled Oct. 20. For the same period last year, Lilly served up a profit of $755.2 million, or 69 cents, on revenue of $3.28 billion.

Wall Street is becoming increasingly neutral. Hold ratings now outnumber buy recommendations by 16 to 10, says Thomson First Call. Three months ago, buy and hold recommendations were evenly matched.

Support is softening even though analysts say Lilly has less generic-drug exposure than its Big Pharma peers, some strong new products and an attractive research and development pipeline. That's because at the same time, it's seeing greater potential risk to its usual source of anxiety -- falling U.S. prescriptions and revenue for Zyprexa, the schizophrenia drug that accounted for 30% of sales in the first half.

Risk Profile

Although Zyprexa has survived a patent challenge , it has been in a long-term slide in the U.S. as competing drugs with fewer side effects erode its market share. In the second quarter, worldwide sales dropped 10% to $1.1 billion. U.S. sales sank 21% vs. the same period last year, and foreign sales rose 6%.

Lilly has predicted "a slight decline" in worldwide sales for 2005. The company has also said that the U.S. growth rate in the second half should improve vs. the same period last year and that full-year foreign sales should grow "in the single digits" vs. 2004.

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