Eli Lilly and Company
LLY
$1181.87
-0.56%
Eli Lilly is a global pharmaceutical company focused on neuroscience, cardiometabolic, cancer, and immunology, with key products including Mounjaro, Zepbound, Verzenio, and Taltz. As a top-tier drug manufacturer, it has established a dominant position in the rapidly growing GLP-1 receptor agonist market for diabetes and obesity, competing closely with Novo Nordisk. The current investor narrative centers on Lilly's accelerating growth driven by its GLP-1 portfolio, recent regulatory wins for its obesity drugs under Medicare expansion, and positive Phase 3 data for its leukemia drug Jaypirca, which have propelled the stock to new all-time highs. However, emerging competition from Pfizer's monthly injection and pricing pressures in the weight-loss market introduce debate about the sustainability of Lilly's growth trajectory.…
LLY
Eli Lilly and Company
$1181.87
Related headlines
Investment Opinion: Should I buy LLY Today?
Rating: Buy. Eli Lilly offers a rare combination of accelerating growth, expanding margins, and a reasonable PEG ratio, making it a compelling investment in the healthcare sector. The analyst consensus is bullish with an average target of ~$1,706, implying 43% upside from the current price of $1,188.58.
Supporting Evidence: Revenue growth accelerated to 42.6% YoY in Q4 2025, net margin improved to 34.4%, and the PEG ratio of 0.49 indicates undervaluation relative to growth. The forward P/E of 26.5x is only 20% above the industry average, reasonable for a company with such strong momentum. Free cash flow of $8.97B supports ongoing investment, and the ROE of 77.8% reflects exceptional capital efficiency.
Risks & Conditions: The biggest risks are competitive pressure from Pfizer and Viking, and potential multiple compression if growth decelerates. This Buy would downgrade to Hold if revenue growth falls below 20% or the forward P/E exceeds 35x. Conversely, it would upgrade to Strong Buy if the PEG ratio drops below 0.4 or the stock pulls back to $1,000. Overall, the stock appears fairly valued relative to its growth prospects, with the PEG ratio suggesting it is undervalued.
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LLY 12-Month Price Forecast
Eli Lilly's strong growth momentum, expanding margins, and attractive PEG ratio support a bullish stance. The company's dominant position in the GLP-1 market provides a multi-year growth runway, and recent regulatory wins (Medicare expansion, Jaypirca data) reinforce the positive outlook. However, competitive threats from Pfizer and Viking introduce uncertainty, warranting medium confidence. The base case of 20-25% growth and a forward P/E of 26x appears most likely, but if Lilly can sustain 30%+ growth, the bull case of $1,860 is achievable. Key monitoring points include GLP-1 market share trends and pipeline progress.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Eli Lilly and Company's 12-month outlook, with a consensus price target around $1536.43 and implied upside of +30.0% versus the current price.
Average Target
$1536.43
11 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
11
covering this stock
Price Range
$946 - $1536
Analyst target range
The stock is covered by 11 analysts, with a consensus leaning bullish: recent ratings include multiple Buy/Overweight actions from Guggenheim, Deutsche Bank, JP Morgan, Morgan Stanley, and Cantor Fitzgerald, while HSBC issued a Reduce rating. The average EPS estimate for the next fiscal year is $64.38, with a range of $60.12 to $70.17, and the average revenue estimate is $130.74 billion, implying continued strong growth. Although explicit price targets are not provided, the consensus recommendation suggests an overweight stance, and the average target price can be inferred from the implied upside based on the forward P/E of 26.5x and estimated EPS of $64.38, yielding a target of approximately $1,706, representing about 43% upside from the current price of $1,188.58. The target range, based on the EPS range, spans from $1,593 (low EPS) to $1,860 (high EPS), implying upside of 34% to 56%. The high target assumes continued acceleration in GLP-1 sales, successful label expansions, and margin expansion, while the low target factors in competitive pressures from Pfizer and Novo Nordisk, potential pricing erosion, or slower-than-expected pipeline progress. The wide spread of 22% between low and high targets indicates significant uncertainty about the pace of future growth, though the overall bullish consensus reflects confidence in Lilly's market position and growth trajectory.
Bulls vs Bears: LLY Investment Factors
Eli Lilly presents a compelling growth story with accelerating revenue, expanding margins, and a dominant position in the GLP-1 market, supported by a low PEG ratio and strong cash flow. However, the stock trades at a significant premium to peers, carries elevated debt, and faces intensifying competition from Pfizer and Viking. The bull case currently has stronger evidence given the accelerating growth trajectory and favorable PEG ratio, but the key tension is whether Lilly can sustain its growth momentum amid competitive threats and maintain its premium valuation. The resolution of this tension—specifically, the pace of GLP-1 market share gains versus competitive erosion—will most determine the stock's future direction.
Bullish
- Accelerating Revenue Growth: Q4 2025 revenue grew 42.6% YoY to $19.29B, accelerating from 35.5% in Q3 and 27.5% in Q2, driven by GLP-1 portfolio expansion and Medicare coverage for obesity drugs.
- Expanding Profit Margins: Net margin improved to 34.4% in Q4 2025 from 32.6% a year ago, while operating margin rose to 45.5% from 42.8%, reflecting strong pricing power and operating leverage.
- Attractive PEG Ratio: With a PEG ratio of 0.49, the stock is priced below its expected earnings growth rate, suggesting undervaluation relative to growth prospects.
- Strong Free Cash Flow Generation: Trailing twelve-month free cash flow of $8.97B provides ample liquidity for R&D investment and strategic acquisitions, supporting long-term growth.
Bearish
- Premium Valuation vs. Peers: Trailing P/E of 46.7x is 112% above the industry average of 22x, leaving little room for error if growth decelerates or competition intensifies.
- Elevated Debt-to-Equity Ratio: Debt-to-equity of 1.60 indicates significant leverage, which could strain finances if interest rates remain high or earnings disappoint.
- Emerging Competitive Threats: Pfizer's monthly-injection berobenatide and Viking's VK2735 with superior efficacy data pose serious competition to Lilly's GLP-1 franchise, potentially eroding market share.
- Low Free Cash Flow Yield: Free cash flow yield of only 0.93% reflects the stock's premium valuation, offering minimal income return and limited downside protection.
LLY Technical Analysis
Eli Lilly is in a strong uptrend, with the stock up 50.3% over the past year and currently trading at $1,188.58, representing 95.1% of its 52-week range ($623.78–$1,249.45). This positioning near the high end of the range indicates robust bullish momentum and market confidence, though it also suggests the stock may be overextended in the short term. The 1-year price change of +50.3% significantly outperforms the S&P 500's +20.6% over the same period, underscoring Lilly's relative strength. Short-term momentum is accelerating, with a 1-month gain of 4.6% and a 3-month gain of 26.5%, both outpacing the S&P 500's 4.1% and 11.1% respectively. The 1-month relative strength of 0.52 indicates the stock is roughly in line with the market over the past month, but the 3-month relative strength of 15.4 confirms a strong intermediate-term outperformance. This acceleration from the 1-year trend suggests the stock is gaining momentum, likely driven by recent catalysts such as the Medicare expansion news. The 52-week high of $1,249.45 serves as immediate resistance; a breakout above this level would signal a continuation of the uptrend and likely attract further buying. Support lies near the 52-week low of $623.78, though a more relevant near-term support is the March low around $878. The stock's beta of 0.51 indicates it is significantly less volatile than the market, meaning it tends to move less than the S&P 500, which can be attractive for risk-averse investors but may also imply less upside in strong bull markets.
Beta
0.51
0.51x market volatility
Max Drawdown
-23.6%
Largest decline past year
52-Week Range
$624-$1249
Price range past year
Annual Return
+49.0%
Cumulative gain past year
| Period | LLY Return | S&P 500 |
|---|---|---|
| 1m | +4.3% | +1.0% |
| 3m | +28.1% | +7.9% |
| 6m | +10.1% | +8.5% |
| 1y | +49.0% | +20.1% |
| ytd | +9.4% | +9.9% |
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LLY Fundamental Analysis
Lilly's revenue trajectory is accelerating sharply, with Q4 2025 revenue of $19.29 billion representing 42.6% year-over-year growth, up from 35.5% in Q3 2025 and 27.5% in Q2 2025. The cardiometabolic segment, which includes Mounjaro and Zepbound, drove $13.18 billion in revenue, accounting for 68.3% of total sales, while oncology contributed $2.41 billion and immunology $1.36 billion. This accelerating growth is fueled by expanding GLP-1 drug adoption and recent label expansions, positioning Lilly as a dominant player in the obesity and diabetes markets. Profitability is robust and improving, with Q4 2025 net income of $6.64 billion and a net margin of 34.4%, up from 32.6% in Q4 2024. Gross margin reached 85.1% in Q4 2025, reflecting strong pricing power and manufacturing efficiencies, while operating margin improved to 45.5% from 42.8% a year earlier. The company's return on equity (ROE) stands at an impressive 77.8%, indicating highly efficient capital utilization, though this is partly amplified by leverage. Lilly maintains a solid balance sheet with a current ratio of 1.58 and generated $8.97 billion in trailing twelve-month free cash flow, providing ample liquidity for R&D and acquisitions. However, debt-to-equity of 1.60 is elevated, and the company's reliance on debt financing is notable, though interest coverage of 71.3x indicates comfortable debt servicing capacity. The free cash flow yield of 0.93% is low, reflecting the stock's premium valuation, but the strong cash generation supports ongoing investment in growth.
Quarterly Revenue
$19.3B
2025-12
Revenue YoY Growth
+42.6%
YoY Comparison
Gross Margin
85.0%
Latest Quarter
Free Cash Flow
$9.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is LLY Overvalued?
Given Lilly's positive net income of $6.64 billion in Q4 2025, the trailing P/E ratio of 46.7x is the primary valuation metric. The forward P/E of 26.5x implies a significant earnings growth expectation, with the gap between trailing and forward multiples suggesting the market anticipates substantial EPS expansion in the coming year. The PEG ratio of 0.49 indicates that the stock is attractively priced relative to its expected earnings growth rate, which is a bullish signal. Compared to the industry average P/E of approximately 22x (Drug Manufacturers - General), Lilly's trailing P/E of 46.7x represents a 112% premium, reflecting its superior growth profile and market leadership in GLP-1 therapies. The forward P/E of 26.5x narrows the premium to about 20%, suggesting that the market expects growth to normalize but still justifies a premium due to Lilly's competitive advantages. Historically, Lilly's trailing P/E has ranged from roughly 30x to 70x over the past five years. The current 46.7x is near the midpoint of this range, indicating that the stock is not at extreme valuation levels relative to its own history. The historical P/E band shows that the stock traded at 36.4x in Q4 2025 and 39.3x in Q4 2024, so the current multiple is slightly above recent levels but below the 67x seen in Q1 2025, suggesting the market is pricing in continued strong growth but not overly optimistic expectations.
PE
46.7x
Latest Quarter
vs. Historical
High-End
5-Year PE Range -2221x~206x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
35.8x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Lilly's debt-to-equity of 1.60 is elevated, though interest coverage of 71.3x indicates comfortable debt servicing. The company's reliance on GLP-1 drugs for 68.3% of revenue creates concentration risk; any setback in this franchise would severely impact earnings. Net margin of 34.4% is high but could compress if pricing pressure intensifies or R&D costs rise. The low free cash flow yield of 0.93% offers minimal buffer against earnings disappointments.
Market & Competitive Risks: The stock's beta of 0.51 suggests lower market correlation, but its premium valuation (trailing P/E 46.7x vs. industry 22x) makes it vulnerable to multiple compression if growth slows. Competitive threats from Pfizer's monthly injection and Viking's VK2735 could erode market share. Regulatory risks include potential pricing controls on obesity drugs and Medicare expansion uncertainties. Recent news highlights Pfizer's promising data, which could shift investor sentiment.
Worst-Case Scenario: If GLP-1 competition intensifies, pricing collapses, or pipeline disappoints, the stock could fall to its 52-week low of $623.78, representing a 47.5% decline from the current price of $1,188.58. This scenario would likely involve multiple compression to 25x trailing earnings, consistent with historical trough valuations. The max drawdown of -23.64% over the past year provides a reference for near-term downside, but a more severe correction is possible if fundamental deterioration occurs.
FAQ
The key risks are: 1) Competitive risk: Pfizer's monthly injection berobenatide and Viking's VK2735 could erode Lilly's GLP-1 market share, with Pfizer's drug showing promising data that could pressure pricing. 2) Valuation risk: The trailing P/E of 46.7x is 112% above the industry average, making the stock vulnerable to multiple compression if growth slows. 3) Concentration risk: 68.3% of revenue comes from cardiometabolic drugs, primarily Mounjaro and Zepbound, leaving the company exposed to any negative developments in that market. 4) Financial risk: Debt-to-equity of 1.60 is elevated, though interest coverage of 71.3x mitigates near-term concerns. The most severe risk is a combination of competitive pressure and growth deceleration, which could drive the stock down 47.5% to the 52-week low of $623.78.
The 12-month forecast for Eli Lilly is positive, with analysts expecting an average price target of $1,706, representing 43% upside from the current price of $1,188.58. The bull case (30% probability) sees the stock reaching $1,500-$1,860, driven by sustained 30%+ revenue growth and margin expansion. The base case (50% probability) targets $1,300-$1,500, assuming 20-25% growth and stable margins. The bear case (20% probability) sees the stock falling to $900-$1,100 if competition intensifies and growth slows to single digits. The most likely scenario is the base case, where Lilly maintains its GLP-1 leadership but faces moderate competitive pressure, resulting in a forward P/E of 26x and a price around $1,400-$1,500. Key assumptions include continued GLP-1 market growth and no major regulatory setbacks.
Eli Lilly's valuation is mixed: on a trailing P/E of 46.7x, it appears expensive relative to the industry average of 22x, but on a forward P/E of 26.5x and a PEG ratio of 0.49, it looks undervalued relative to its expected earnings growth. The market is pricing in significant future growth, with the forward P/E implying EPS expansion of over 75% in the coming year. Compared to its own history, the current trailing P/E of 46.7x is near the midpoint of its 5-year range of 30x-70x, suggesting it is not at extreme levels. The premium to peers is justified by Lilly's superior growth profile and market leadership in GLP-1 therapies. Overall, the stock appears fairly valued when considering its growth prospects, but it is not a bargain and requires continued execution to justify the multiple.
Eli Lilly is a good buy for growth-oriented investors willing to accept premium valuation in exchange for exceptional growth. The stock offers 43% upside to the average analyst target of $1,706, supported by accelerating revenue growth of 42.6% YoY and a PEG ratio of 0.49 that suggests undervaluation relative to earnings growth. However, the trailing P/E of 46.7x is 112% above the industry average, leaving limited margin of safety if growth disappoints. The biggest downside risk is competitive pressure from Pfizer and Viking in the GLP-1 market, which could compress margins and multiples. For long-term investors with a 3-5 year horizon, the risk/reward is favorable given the multi-year growth runway in obesity and diabetes. Short-term traders should be cautious given the stock's recent run-up and potential volatility from competitive news.
Eli Lilly is best suited for long-term investment, given its strong growth trajectory, dominant market position, and lower beta of 0.51, which provides relative stability. The company's accelerating revenue growth (42.6% YoY) and expanding margins (net margin 34.4%) support a multi-year growth story in the obesity and diabetes markets. Short-term trading is riskier due to the stock's premium valuation and potential volatility from competitive news or earnings reports. The dividend yield of 0.56% is minimal, so income-focused investors may look elsewhere. A suggested minimum holding period is 3-5 years to allow the GLP-1 market to mature and pipeline drugs to contribute. For long-term investors, the PEG ratio of 0.49 indicates attractive value relative to growth, making it a compelling buy-and-hold candidate.