Eli Lilly & Co.
LLY
$935.58
-1.98%
Eli Lilly & Co. is a leading global pharmaceutical company focused on developing and manufacturing medicines. It is a dominant player in the drug manufacturing industry, with core advantages in its robust neuroscience, cardiometabolic, cancer, and immunology portfolios.
LLY
Eli Lilly & Co.
$935.58
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Investment Opinion: Should I buy LLY Today?
Based on a synthesis of the exceptional fundamental growth, rich valuation, and current technical weakness, the objective assessment is a Hold. The company's operational performance justifies a premium, but the current price already reflects immense future success. New investors should wait for a more attractive entry point or clearer signs that competitive and legal risks are abating. Existing shareholders with a long-term horizon may choose to maintain their position given the company's dominant market position.
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LLY 12-Month Price Forecast
The fundamental growth story is compelling and intact, but the risk/reward is balanced after the recent pullback. The stock is no longer at peak euphoria but remains priced for perfection. The next 12 months will be a test of its ability to meet lofty expectations.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Eli Lilly & Co.'s 12-month outlook, with a consensus price target around $1216.25 and implied upside of +30.0% versus the current price.
Average Target
$1216.25
11 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
11
covering this stock
Price Range
$748 - $1216
Analyst target range
Data not available. The provided data includes recent institutional rating actions but does not contain a consensus target price or a detailed breakdown of analyst ratings (e.g., Buy/Hold/Sell distribution). Therefore, a summary of Wall Street analyst consensus cannot be provided based on the available inputs.
Bulls vs Bears: LLY Investment Factors
Eli Lilly presents a classic high-growth, high-expectation investment case. Its fundamental performance is stellar, with explosive revenue growth and best-in-class profitability. However, this success is fully priced in, leading to rich valuation multiples and heightened sensitivity to any growth stumbles or competitive threats.
Bullish
- Explosive Revenue Growth: Q4 revenue grew 42.6% YoY, driven by blockbuster drugs.
- Exceptional Profitability: Operating margin of 45.5% and ROE of 77.8% are industry-leading.
- Strong Pipeline & Acquisitions: Recent Centessa buyout expands into high-growth sleep medicine market.
- Attractive PEG Ratio: PEG of 0.49 suggests undervaluation relative to earnings growth.
Bearish
- Premium Valuation: Trailing P/E of 46.8 and EV/EBITDA of 35.8 are extremely high.
- Significant Debt Load: Debt-to-equity ratio of 1.60 indicates elevated financial leverage.
- Recent Technical Weakness: Stock down 14.4% over 3 months, underperforming SPY by 9.8%.
- Intense Competition: Novo Nordisk's new obesity drug data shows competitive threat.
LLY Technical Analysis
The stock has experienced significant volatility over the past six months, rallying strongly from around $820 in early October to a peak near $1134 in late November before undergoing a substantial correction. The overall trend from the provided data shows a net gain of 12.2% over six months, but the recent performance has been weak, with the stock down 12.6% over the past month and 14.4% over the past three months. The current price of $919.77 sits near the lower end of its 52-week range ($623.78 to $1133.95), representing a drawdown of approximately 18.9% from its high. The stock has underperformed the broader market (SPY) by 7.3 percentage points over the past month, indicating significant relative weakness.
Beta
0.43
0.43x market volatility
Max Drawdown
-32.7%
Largest decline past year
52-Week Range
$624-$1134
Price range past year
Annual Return
+14.3%
Cumulative gain past year
| Period | LLY Return | S&P 500 |
|---|---|---|
| 1m | -7.2% | -3.6% |
| 3m | -13.4% | -4.0% |
| 6m | +11.4% | -2.0% |
| 1y | +14.3% | +16.2% |
| ytd | -13.4% | -3.8% |
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LLY Fundamental Analysis
Revenue growth has been exceptionally strong, with Q4 2025 revenue of $19.29 billion representing a 42.6% year-over-year increase. Profitability metrics are robust, with a net margin of 34.4% and an operating margin of 45.5% for the latest quarter. The company's financial health is supported by a strong current ratio of 1.58, indicating good short-term liquidity, though it carries a significant debt load with a debt-to-equity ratio of 1.60. Operational efficiency is highlighted by a remarkably high return on equity (ROE) of 77.8% and a solid return on assets (ROA) of 19.4%, demonstrating effective use of shareholder capital and company assets.
Quarterly Revenue
$19.3B
2025-12
Revenue YoY Growth
+0.42%
YoY Comparison
Gross Margin
+0.85%
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 the company's substantial positive net income, the primary valuation metric is the Price-to-Earnings (P/E) ratio. The trailing P/E ratio is elevated at 46.8, while the forward P/E is a more moderate 21.9, reflecting high growth expectations. The PEG ratio, which factors in growth, is 0.49, suggesting the stock may be undervalued relative to its earnings growth prospects. Other valuation metrics also appear rich, with a Price-to-Sales ratio of 14.8 and an EV/EBITDA of 35.8, indicating the market is pricing in significant future expansion from its current blockbuster drug portfolio.
PE
46.8x
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
LLY's primary risks are valuation-related and competitive. The stock trades at a significant premium (P/E 46.8, EV/EBITDA 35.8), making it vulnerable to multiple compression if growth expectations are not met. Intensifying competition, particularly from Novo Nordisk's next-generation obesity drugs, poses a long-term threat to its key growth franchises. The company also carries substantial financial leverage (Debt/Equity 1.60), which could pressure finances in a higher-rate environment. Recent news highlights legal exposure from a class-action lawsuit and the constant regulatory risk inherent in drug development and pricing. Technically, the stock is in a significant correction, down over 14% in three months and showing relative weakness against the market, indicating negative momentum and sentiment.
FAQ
Key risks include valuation compression if growth slows, intense competition in its core obesity/diabetes markets from rivals like Novo Nordisk, significant financial leverage (Debt/Equity 1.60), and regulatory/legal challenges, including a major class-action lawsuit. The stock's high beta and recent underperformance also indicate sensitivity to market sentiment and momentum shifts.
Based on the analysis, the 12-month outlook has a base case target range of $950-$1100, implying modest upside from $919. The bull case ($1134-$1250) depends on flawless execution and multiple expansion, while the bear case ($750-$900) involves growth stumbles. The forward P/E of 21.9 and analyst EPS estimates near $61 provide a fundamental anchor for these forecasts.
LLY appears overvalued on traditional metrics like P/E (46.8) and Price/Sales (14.8). However, its PEG ratio of 0.49, which factors in earnings growth, suggests it may be reasonably valued or even undervalued relative to its growth prospects. The forward P/E of 21.9 indicates the market expects significant earnings expansion. The valuation is high but supported by exceptional current growth.
LLY is a high-quality stock with a strong growth trajectory, but it is not an unequivocal 'good buy' at current levels. Its valuation is rich (P/E 46.8), and it has recently corrected from all-time highs. It may be suitable for long-term growth investors willing to pay a premium for a market leader, but short-term traders face significant volatility and downside risk.
LLY is primarily suitable for long-term investment. Its value is derived from multi-year drug cycles and pipeline development, not short-term trading catalysts. The stock's high volatility and premium valuation make it risky for short-term holders. Long-term investors can better weather the volatility to capture the potential of its blockbuster drug portfolio and R&D pipeline.