Eli Lilly and Company
LLY
$1179.27
+0.83%
Eli Lilly and Company is a global pharmaceutical leader whose core business spans cardiometabolic health, oncology, immunology, and neuroscience, with flagship products including Mounjaro, Zepbound, Verzenio, Jardiance, Taltz, and Olumiant. The company has evolved from a diversified drugmaker into the dominant platform in the GLP-1/obesity treatment market, leveraging its deep metabolic pipeline and manufacturing scale to outpace rivals Novo Nordisk and emerging biotech challengers. The current investor narrative is dominated by the explosive growth of its incretin franchise, with recent Phase 3 data showing its next-generation drug retatrutide drove more than half of patients to lose 20% of body weight and a third to lose 25%, reinforcing Lilly's leadership. At the same time, debate centers on intensifying competition from Viking Therapeutics, Roche, and Novo Nordisk's oral Wegovy, as well as the company's disciplined R&D decisions — including cutting a weaker obesity candidate — which signal a high internal bar and a push to diversify beyond GLP-1s.…
LLY
Eli Lilly and Company
$1179.27
Related headlines
Investment Opinion: Should I buy LLY Today?
We assign a Buy rating to Eli Lilly, underpinned by its dominant position in the high-growth GLP-1 market, exceptional financial performance, and reasonable forward valuation. The analyst consensus is 'buy' with a mean recommendation of 1.63 and an average target price of $1330.14, implying 12.8% upside from the current price of $1179.27. The core thesis is that Lilly's revenue growth (47.67% YoY) and margin expansion (operating margin up to 54.22%) will continue to drive earnings growth, supported by a deep pipeline including retatrutide, which showed unprecedented weight loss in Phase 3 trials.
Supporting evidence includes: 1) Revenue growth of 47.67% YoY in Q2 2026, with sequential increases every quarter; 2) Gross margin of 85.78% and operating margin of 54.22%, demonstrating strong pricing power and operating leverage; 3) Forward PE of 24.75x and PEG ratio of 0.48, suggesting the stock is undervalued relative to its growth; 4) Free cash flow of $20.054 billion TTM, providing ample capital for dividends, buybacks, and R&D; and 5) Analyst target upside of 12.8%, with a high target of $1600. Compared to the drug manufacturers industry, Lilly's growth and profitability metrics are superior, justifying a premium.
Key risks that could invalidate the thesis include: 1) Competitive threats from Viking Therapeutics, Roche, and Novo Nordisk's oral Wegovy, which could erode market share and pricing; 2) Pipeline failures, particularly in late-stage trials like retatrutide, which could dampen growth prospects; and 3) Valuation compression if growth decelerates or if interest rates remain elevated. The rating would upgrade to Strong Buy if the stock pulls back to the $1000-1050 range (forward PE ~20x) or if retatrutide shows best-in-class efficacy and safety. It would downgrade to Hold if revenue growth falls below 30% YoY or if competitive pressures lead to market share losses. Relative to its history, the PS ratio of 14.81x is near the low end of its range, suggesting the stock is fairly valued to slightly undervalued, while the trailing PE of 46.58x is mid-range. Overall, we view LLY as fairly valued with a growth premium that is justified by its pipeline and market leadership.
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LLY 12-Month Price Forecast
Eli Lilly presents a compelling growth story with strong fundamentals and a reasonable forward valuation. The company's 47.67% revenue growth, 85.78% gross margin, and 54.22% operating margin demonstrate exceptional execution. The forward PE of 24.75x and PEG of 0.48 suggest the stock is undervalued relative to its earnings growth, while the analyst consensus of 'buy' with a $1330.14 average target provides a positive sentiment backdrop. However, intensifying competition and a leveraged balance sheet pose risks. We would upgrade to high confidence if retatrutide shows best-in-class data and competitive threats remain contained; we would downgrade to neutral if revenue growth decelerates below 30% or if competitive losses become evident.
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 $1330.14 and implied upside of +12.8% versus the current price.
Average Target
$1330.14
0 analysts
Implied Upside
+12.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$930 - $1600
Analyst target range
Eli Lilly is covered by 29 analysts, with a consensus recommendation of "buy" and a recommendation mean of 1.63 (where 1 is a strong buy and 5 is a strong sell), indicating a bullish consensus. The average target price is $1330.14, which implies approximately 12.8% upside from the current price of $1179.27. The consensus leans bullish, supported by recent institutional ratings that show mostly Buy or Overweight ratings from major firms including JP Morgan, TD Cowen, Guggenheim, Truist Securities, Cantor Fitzgerald, Wells Fargo, Citigroup, Bernstein, and UBS, with only HSBC maintaining a Reduce rating. The estimated EPS average of $67.29 for the forward year, with a range of $61.29 to $72.93, underpins the earnings growth expectations that justify the premium valuation. The target price range spans from a low of $930 to a high of $1600, representing a wide spread of 72% from low to high, which signals significant uncertainty among analysts about the company's future trajectory. The high target of $1600 assumes continued dominance in the obesity market, successful pipeline execution including retatrutide, and multiple expansion as earnings grow into the valuation. The low target of $930 implies concerns about competitive pressures from Viking, Roche, and Novo Nordisk, potential pricing pressure, or slower-than-expected adoption of new products. The wide spread, combined with the recent flurry of analyst activity — mostly reiterations of Buy ratings — suggests strong conviction in the long-term story but recognition of near-term risks. The presence of a Reduce rating from HSBC indicates that not all analysts are convinced, and the stock's low beta of 0.453 may mean it is viewed as a defensive holding in a growth-oriented sector, which could limit upside if the market rotates into higher-beta names.
Bulls vs Bears: LLY Investment Factors
The bull case for Eli Lilly is compelling, anchored by explosive revenue growth (47.67% YoY), exceptional margins (85.78% gross, 54.22% operating), and a dominant position in the GLP-1 market. The forward PE of 24.75x and PEG of 0.48 suggest the stock is reasonably valued relative to its growth trajectory, with analysts projecting 12.8% upside to an average target of $1330.14. However, the bear case raises valid concerns: intensifying competition from Viking, Roche, and Novo Nordisk, a leveraged balance sheet (D/E of 1.60), and recent underperformance versus the S&P 500 (YTD relative strength of -5.01%). The most critical tension is whether Lilly can sustain its growth premium amid rising competition and potential pricing pressure. If retatrutide and other pipeline assets continue to deliver, the bull case prevails; if competitive threats erode market share or pricing power, the premium valuation could compress sharply.
Bullish
- Explosive revenue growth: Q2 2026 revenue surged 47.67% YoY to $22.974 billion, with sequential growth every quarter since Q1 2025. This relentless top-line expansion is driven by the GLP-1 franchise, which dominates the cardiometabolic segment ($18.353 billion in Q2 2026).
- Exceptional profitability and margins: Gross margin stands at 85.78% and operating margin expanded to 54.22% in Q2 2026, up from 49.39% in Q1 2026 and 46.59% in Q4 2025. Net income reached $7.095 billion, a 30.88% net margin, demonstrating significant operating leverage.
- Attractive forward valuation: Forward PE of 24.75x is reasonable for a company growing earnings at a rapid clip, and the PEG ratio of 0.48 suggests undervaluation relative to growth. The PS ratio of 14.81x is near the low end of its historical range (high of 78.14x in Q1 2024).
- Strong analyst consensus and upside: 29 analysts rate LLY a 'buy' with a mean recommendation of 1.63 and an average target price of $1330.14, implying 12.8% upside. The high target of $1600 reflects confidence in pipeline execution and market dominance.
Bearish
- Elevated trailing valuation: Trailing PE of 46.58x and EV/EBITDA of 31.57x are premium multiples that leave little room for error. The stock trades at 36.37x book value, reflecting high expectations that could compress if growth decelerates.
- Intensifying competition: Viking Therapeutics' oral obesity drug advanced to Phase 3, and Roche's enicepatide shows promise. Novo Nordisk's oral Wegovy demonstrated real-world weight loss, threatening Lilly's market share in the obesity space.
- Significant leverage: Debt-to-equity ratio of 1.60 and total debt-to-capitalization of 61.84% indicate substantial leverage. While interest coverage is strong at 36.1x, rising rates could pressure financial flexibility.
- Recent underperformance vs. market: Year-to-date, LLY has underperformed the S&P 500 by 5.01 percentage points, and over the past 3 months, it lagged by 3.91 percentage points. This divergence suggests waning momentum despite strong fundamentals.
LLY Technical Analysis
Eli Lilly is in a sustained uptrend, with the stock up 37.87% over the past year and trading at 1179.27, which places it at approximately 77.6% of its 52-week range of 783.85 to 1292.65. This positioning indicates the stock is in the upper half of its annual range but still about 8.8% below its 52-week high, suggesting room for momentum to reassert rather than an overextended blow-off top. The 1-year gain of 37.87% significantly outpaces the S&P 500's 16.0% advance, reflecting strong relative strength of 21.87 percentage points over the same period. Over the past month, the stock has gained 4.90%, outpacing the S&P 500's 2.12% gain and producing a relative strength of 2.78 percentage points, indicating accelerating short-term momentum. However, the 3-month change is -0.78%, slightly negative and lagging the S&P 500's 3.13% gain by 3.91 percentage points, revealing a divergence where the intermediate-term trend has stalled while the near-term has re-accelerated. This pattern suggests a consolidation phase that may be resolving to the upside, especially given the 6-month gain of 25.53% and year-to-date gain of 9.16%, though the YTD relative strength of -5.01 percentage points versus the S&P 500 highlights that Lilly has underperformed the broader market on a year-to-date basis. Key technical support lies near the 52-week low of 783.85, with a more immediate support zone around the 1100-1120 area where the stock found buyers in September; resistance is at the 52-week high of 1292.65, and a breakout above that level would signal a new leg higher, while a breakdown below 1100 could trigger a deeper correction toward the 1000 level. The stock's beta of 0.453 indicates it is significantly less volatile than the market — roughly 55% less volatile than SPY — which is unusual for a high-growth pharmaceutical name and suggests defensive characteristics that may appeal to risk-averse investors, though it also implies the stock may lag in strong bull markets. The maximum drawdown of -23.31% over the period shows the stock is not immune to sharp pullbacks, and with a short ratio of 3.09, there is moderate short interest that could fuel a squeeze on positive news.
Beta
0.45
0.45x market volatility
Max Drawdown
-23.3%
Largest decline past year
52-Week Range
$784-$1293
Price range past year
Annual Return
+37.9%
Cumulative gain past year
| Period | LLY Return | S&P 500 |
|---|---|---|
| 1m | +4.9% | +1.9% |
| 3m | -0.8% | +3.9% |
| 6m | +25.5% | +12.1% |
| 1y | +37.9% | +19.2% |
| ytd | +9.2% | +14.2% |
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LLY Fundamental Analysis
Eli Lilly's revenue trajectory is exceptionally strong, with Q2 2026 revenue of $22.974 billion representing 47.67% year-over-year growth from $15.558 billion in Q2 2025. The multi-quarter trend shows consistent acceleration: revenue rose from $12.729 billion in Q1 2025 to $15.558 billion in Q2 2025, $17.601 billion in Q3 2025, $19.292 billion in Q4 2025, $19.799 billion in Q1 2026, and $22.974 billion in Q2 2026, demonstrating sequential growth every quarter. The cardiometabolic health segment dominates with $18.353 billion in revenue, followed by oncology at $2.57 billion, immunology at $1.417 billion, and neuroscience at $429 million, confirming that the GLP-1 franchise is the primary growth engine. This relentless top-line expansion implies the investment case remains firmly intact, driven by both volume and pricing power in the obesity and diabetes markets. Profitability is robust, with Q2 2026 net income of $7.095 billion and a net margin of 30.88%, while the gross margin stands at 85.78% — exceptionally high for the pharmaceutical industry and indicative of strong pricing and manufacturing efficiency. Operating margin was 54.22% in Q2 2026, up from 49.39% in Q1 2026 and 46.59% in Q4 2025, showing clear margin expansion as revenue scales faster than costs. The company is solidly profitable, and the margin trajectory suggests operating leverage is kicking in, with R&D expenses of $3.819 billion in Q2 2026 representing 16.6% of revenue, a level that supports future growth without sacrificing near-term profitability. The balance sheet shows a debt-to-equity ratio of 1.60, which is elevated but manageable given the company's cash generation, and a current ratio of 1.58 indicates adequate short-term liquidity. Free cash flow on a trailing twelve-month basis is $20.054 billion, providing ample internal funding for growth initiatives, dividends, and buybacks. However, the debt-to-equity ratio of 1.60 and total debt-to-capitalization of 61.84% suggest the company uses significant leverage, though interest coverage of 36.1x in Q2 2026 provides a strong cushion. Return on equity is an impressive 77.78%, reflecting efficient capital deployment, while return on assets is 20.36%, both well above industry norms. The company generated $10.69 billion in operating cash flow in Q2 2026 alone, with capital expenditures of $2.933 billion, resulting in free cash flow of $7.757 billion for the quarter, demonstrating the ability to fund growth internally while returning capital to shareholders.
Quarterly Revenue
$23.0B
2026-06
Revenue YoY Growth
+47.7%
YoY Comparison
Gross Margin
85.8%
Latest Quarter
Free Cash Flow
$20.1B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is LLY Overvalued?
Because Eli Lilly is profitable with positive net income of $7.095 billion in Q2 2026, the PE ratio is the primary valuation metric. The trailing PE is 46.58x, while the forward PE is 24.75x, implying the market expects earnings to nearly double over the next year — a gap that reflects extremely optimistic growth expectations embedded in the forward multiple. The PEG ratio of 0.48 suggests that when adjusted for growth, the stock is actually undervalued relative to its earnings growth rate, though this metric can be misleading for companies with temporarily depressed earnings. Compared to the drug manufacturers general industry, Lilly's trailing PE of 46.58x represents a significant premium, though precise industry average data is not available in the provided dataset. However, the forward PE of 24.75x is more reasonable and may be closer to or even below the industry average given Lilly's superior growth profile. The price-to-sales ratio of 14.81x and price-to-book ratio of 36.37x are both elevated, reflecting the market's willingness to pay up for Lilly's growth and profitability. The EV/EBITDA of 31.57x is high but justified by the company's 47.67% revenue growth and 85.78% gross margin, which are exceptional for the sector. Historically, Lilly's PE ratio has ranged from a low of around 27.77x in Q1 2026 to a high of 205.08x in Q3 2024, with the current 46.58x sitting in the middle of that range but well below the peaks seen during periods of earnings volatility. The PS ratio of 14.81x is near the lower end of its historical range, which has been as high as 78.14x in Q1 2024, suggesting that relative to sales, the stock is actually cheaper than it has been historically. This combination of a mid-range PE and a low-end PS ratio suggests the market is pricing in continued strong growth but not necessarily at the euphoric levels seen in prior years, offering a potentially attractive entry point for long-term investors.
PE
46.6x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 28x~76x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
31.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on Eli Lilly's significant leverage and dependence on a single franchise. The debt-to-equity ratio of 1.60 and total debt-to-capitalization of 61.84% indicate substantial borrowing, though interest coverage of 36.1x provides a cushion. The cardiometabolic segment generated $18.353 billion of $22.974 billion in Q2 2026 revenue, representing 80% of total sales, creating concentration risk. Any setback in GLP-1 demand, manufacturing, or reimbursement could disproportionately impact results. Additionally, R&D expenses of $3.819 billion (16.6% of revenue) must continue to yield successful products to justify the valuation, and a failure in late-stage trials like retatrutide would be costly.
Market and competitive risks are intensifying as the obesity market becomes crowded. Viking Therapeutics' oral obesity drug advanced to Phase 3, and Roche's enicepatide showed promising Phase 2 data, while Novo Nordisk's oral Wegovy demonstrated real-world weight loss. These developments threaten Lilly's market share and pricing power. The stock's beta of 0.453 indicates low volatility relative to the market, which may limit upside in strong bull markets but also provides downside protection. However, the trailing PE of 46.58x and EV/EBITDA of 31.57x leave the stock vulnerable to multiple compression if growth slows or if competitive threats materialize. Recent news highlights these risks, with analysts debating whether mid-cap GLP-1 stocks like Viking offer better risk/reward.
A worst-case scenario would involve a combination of competitive erosion, pipeline failures, and macroeconomic headwinds. If retatrutide fails to gain approval or if competitors capture significant market share, revenue growth could decelerate sharply, leading to earnings misses and multiple contraction. The 52-week low of $783.85 represents a 33.5% decline from the current price of $1179.27, and the analyst low target of $930 implies a 21.1% downside. In a severe bear case, the stock could retest the 52-week low, resulting in a loss of approximately 33.5% from current levels. This scenario would likely be triggered by disappointing clinical trial results, regulatory setbacks, or a broader market rotation out of high-growth healthcare names.
FAQ
The key risks include: 1) Competitive risk: Viking Therapeutics' oral obesity drug and Novo Nordisk's oral Wegovy could erode LLY's market share, as evidenced by recent Phase 3 advancements. 2) Financial risk: The debt-to-equity ratio of 1.60 and total debt-to-capitalization of 61.84% indicate significant leverage, though interest coverage is strong at 36.1x. 3) Pipeline risk: Retatrutide's Phase 3 success is crucial; any safety or efficacy concerns could derail growth prospects. 4) Valuation risk: The trailing PE of 46.58x and EV/EBITDA of 31.57x leave little room for error, and any earnings miss could trigger multiple compression. Ranked by severity, competitive and pipeline risks are highest, followed by valuation and financial risks.
Our 12-month forecast for LLY includes three scenarios: Bull case (30% probability) with a target range of $1450-$1600, driven by retatrutide success and market expansion; Base case (50% probability) with a target range of $1250-$1400, assuming steady execution and moderate competition; Bear case (20% probability) with a target range of $930-$1050, triggered by competitive losses or pipeline setbacks. The base case is most likely, hinging on revenue growth remaining above 30% YoY and operating margins staying above 50%. The analyst average target of $1330.14 aligns with our base case. Key catalysts include the next earnings report and retatrutide Phase 3 data.
LLY appears fairly valued to slightly undervalued on a forward basis. The trailing PE of 46.58x is high, but the forward PE of 24.75x is reasonable for a company growing earnings rapidly. The PEG ratio of 0.48 suggests undervaluation relative to growth, and the PS ratio of 14.81x is near the low end of its historical range (high of 78.14x in Q1 2024). Compared to peers, LLY commands a premium due to its market leadership and pipeline, but the forward multiple is not excessive. The market is pricing in continued strong growth, and if the company delivers, the stock could re-rate higher. However, if growth slows, the premium could compress, making the current valuation look stretched.
From a risk/reward perspective, LLY is a good buy for long-term investors. The stock trades at $1179.27, with a forward PE of 24.75x and a PEG of 0.48, suggesting undervaluation relative to its 47.67% revenue growth. Analyst consensus is 'buy' with an average target of $1330.14, implying 12.8% upside. However, the biggest downside risk is competitive pressure from Viking and Novo Nordisk, which could compress the multiple. The stock is suitable for investors with a 3-5 year horizon who can tolerate volatility, given the beta of 0.453 and max drawdown of -23.31%. For those seeking exposure to the obesity drug market, LLY is a core holding, but position sizing should account for the premium valuation and competitive threats.
LLY is best suited for long-term investment, given its growth stage, low beta of 0.453, and strong pipeline. The company does not pay a significant dividend (yield of 0.56%), so returns depend on capital appreciation. Earnings visibility is high due to the recurring nature of GLP-1 prescriptions, but near-term volatility may persist due to competitive news. Short-term trading is less advisable because the stock's low beta and recent 3-month underperformance (-0.78%) suggest limited momentum. A minimum holding period of 3-5 years is recommended to fully capture the growth from retatrutide and other pipeline assets. Investors should monitor quarterly earnings and clinical trial updates to adjust their positions.