Eli Lilly and Company
LLY
$1257.03
+0.43%
Eli Lilly and Company is a global pharmaceutical manufacturer whose portfolio spans cardiometabolic health (Mounjaro, Zepbound, Trulicity, Jardiance, Humalog/Humulin), oncology (Verzenio, Jaypirca), immunology (Taltz, Olumiant), and neuroscience, operating in the highly competitive branded Drug Manufacturers - General industry. Lilly has evolved from a legacy insulin franchise into the dominant platform in the incretin/obesity era, with its GLP-1 and dual/triple-agonist assets giving it a scale and pipeline depth that positions it as the market leader rather than a niche participant. The current investor narrative is dominated by the durability and ceiling of the obesity/diabetes franchise: management has guided toward up to $87 billion in 2026 revenue, and Phase 3 retatrutide data showing more than half of patients losing 20% of body weight (a third exceeding 25%) reinforced Lilly's scientific lead. Debate now centers on competitive encroachment — Novo Nordisk's oral Wegovy, Roche's enicepatide, and Viking's VK2735 — against Lilly's premium multiple and whether the growth runway justifies it.…
LLY
Eli Lilly and Company
$1257.03
Related headlines
LLY 12-Month Price Forecast
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 $1328.05 and implied upside of +5.7% versus the current price.
Average Target
$1328.05
0 analysts
Implied Upside
+5.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$930 - $1600
Analyst target range
Coverage is deep and overwhelmingly constructive: 30 analysts cover LLY with a consensus recommendation of "buy" and a mean rating of 1.61 (where 1.0 is a strong buy). The average target price of $1,328.05 implies +5.65% upside from the current $1,257.03, a modest gap that reflects how much of the bull case is already priced in. Consensus 2026 EPS of $67.55 (range $61.39–$73.01) and revenue of $134.29 billion (range $124.88B–$142.65B) underpin the targets, and the recent institutional flow is stable-to-positive — JP Morgan, TD Cowen, Guggenheim, Truist, Cantor, Wells Fargo, Citigroup, Bernstein, and UBS all reiterated Buy/Overweight/Outperform ratings between July and September 2026, with only HSBC maintaining a Reduce.
The target range of $930 to $1,600 is wide — a 72% spread from low to high — signaling meaningful disagreement about the obesity franchise's terminal value. The $1,600 high target likely assumes retatrutide approval and rapid uptake, sustained 40%+ growth into 2027–2028, and multiple expansion on pipeline optionality; the $930 low target likely prices in GLP-1 pricing pressure, share loss to Novo's oral Wegovy or Roche's enicepatide, and multiple compression toward sector averages. The absence of recent downgrades despite the stock's 53% one-year run suggests analysts are comfortable with the valuation, but the modest +5.65% implied upside to the average target means the risk/reward at current levels is balanced — the stock needs continued fundamental beats to justify further multiple expansion from here.
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Bulls vs Bears: LLY Investment Factors
The bull case currently has stronger evidence: 47.67% revenue growth, operating margin expansion from 46.59% to 54.22% across three quarters, a PEG of 0.48, and retatrutide Phase 3 data that extends Lilly's scientific lead are all concrete and recent. The bear case rests less on deteriorating fundamentals than on price: at 92.8% of the 52-week range with only +5.65% implied upside to the average target, the market has already capitalized much of the good news. The single most important tension is the terminal value of the incretin franchise — whether Lilly's ~80% cardiometabolic revenue concentration proves a durable moat against oral Wegovy, enicepatide, and VK2735, or whether competition compresses pricing and the multiple simultaneously. Resolution of that question, more than any single quarter's earnings, will determine whether the stock compounds from here or mean-reverts toward its 23.31% historical max drawdown pattern.
Bullish
- Revenue accelerating at 47.7% YoY: Q2 2026 revenue reached $22.974B, up 47.67% from $15.558B in Q2 2025, with sequential growth from $17.601B (Q3 2025) to $19.292B (Q4 2025) to $19.799B (Q1 2026) to $22.974B. This is accelerating, not decelerating, growth at a scale few mega-caps have ever achieved.
- Operating leverage is expanding rapidly: Operating margin rose from 46.59% in Q4 2025 to 49.39% in Q1 2026 to 54.22% in Q2 2026, while gross margin held at 85.78%. Revenue is scaling far faster than the cost base, and R&D at $3.819B (16.6% of revenue) is comfortably absorbed by $19.706B of gross profit.
- PEG of 0.48 signals growth-adjusted value: At 46.58x trailing but only 26.48x forward earnings, the 43% multiple compression implies the market expects substantial EPS growth, consistent with consensus 2026 EPS of $67.55. A PEG of 0.48 is unusually low for a mega-cap and is the analytical core of the bull case.
- Retatrutide data extends the scientific lead: Phase 3 results showed more than half of patients losing 20% of body weight and a third exceeding 25%, reinforcing Lilly's position atop the incretin hierarchy. Management has guided toward up to $87B in 2026 revenue, and consensus revenue of $134.29B sits well above that figure, suggesting conservative guidance.
Bearish
- Valuation leaves little room for error: At $1,257.03 the stock sits at 92.8% of its 52-week range (low $783.85, high $1,292.65), just 2.8% below the high. The average analyst target of $1,328.05 implies only +5.65% upside, meaning the bull case is largely priced in and further gains require continued fundamental beats.
- Extreme absolute multiples versus peers: Trailing PE of 46.58x, PS of 14.81x, EV/EBITDA of 31.57x, and P/B of 36.37x all sit far above the high-teens-to-low-20s earnings multiples typical of large-cap pharma. Any growth disappointment would compress these multiples sharply.
- Revenue concentrated in one franchise: Cardiometabolic Health generated $18.353B of Q2 2026 revenue versus Oncology at $2.570B, Immunology at $1.417B, and Neuroscience at $0.429B. Roughly 80% of revenue depends on incretin durability, making the investment case a leveraged single-franchise bet.
- Competitive encroachment is real: Novo Nordisk's oral Wegovy has shown real-world weight loss after switching from injections, Roche's enicepatide posted promising Phase 2 data, and Viking's VK2735 has advanced to Phase 3. Each credible entrant pressures the terminal-value assumptions embedded in the $1,600 high analyst target.
LLY Technical Analysis
LLY is in a sustained, powerful uptrend, with the stock up 53.41% over the trailing year versus just 15.53% for SPY — a relative strength advantage of 37.88 percentage points. At the current price of $1,257.03, the stock sits at roughly 92.8% of its 52-week range (low $783.85, high $1,292.65), just 2.8% below the high. This positioning signals strong momentum but also leaves little margin for error; the stock is near overextension territory where any disappointment in obesity data or guidance could trigger sharp mean reversion. The 23.31% max drawdown over the period shows the stock is not immune to violent pullbacks even within a structural uptrend.
Short-term momentum is accelerating decisively: the stock is up 10.48% over the past month and 6.61% over three months, with the 1-month gain far outpacing the 3-month figure, indicating a fresh leg higher rather than a fading trend. This is corroborated by relative strength of 9.26 points versus SPY over one month, and the 6-month gain of 35.60% shows the move is broad-based rather than a single spike. The recent surge from roughly $1,143 on October 5 to $1,257 on October 16 (+10%) came on the back of the retatrutide Phase 3 readout and constructive 2026 revenue commentary, suggesting fundamental catalysts are driving price rather than pure multiple expansion. Volume of 2.41 million shares is moderate for a mega-cap of this size, and with a short ratio of only 3.01, there is limited short-covering fuel — the move is being driven by genuine institutional accumulation.
Key technical resistance sits at the 52-week high of $1,292.65, roughly 2.8% above the current price; a clean breakout above that level would confirm the uptrend's continuation and likely open a new price discovery range. Support is anchored at the 52-week low of $783.85, but more relevant near-term support lies in the $1,140–$1,160 zone where the stock consolidated in late September and early October. The beta of 0.453 is a critical risk-management input: Lilly is roughly 55% less volatile than the market, meaning its 53% one-year gain was achieved with unusually low systematic risk — a rare combination of high relative strength and defensive characteristics that supports larger position sizing for volatility-targeted portfolios.
Beta
0.45
0.45x market volatility
Max Drawdown
-23.3%
Largest decline past year
52-Week Range
$794-$1293
Price range past year
Annual Return
+53.4%
Cumulative gain past year
| Period | LLY Return | S&P 500 |
|---|---|---|
| 1m | +10.5% | +0.2% |
| 3m | +6.6% | +2.9% |
| 6m | +35.6% | +8.4% |
| 1y | +53.4% | +14.9% |
| ytd | +16.4% | +11.9% |
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LLY Fundamental Analysis
Revenue growth is exceptional and accelerating: Q2 2026 revenue reached $22.974 billion, up 47.67% year-over-year from $15.558 billion in Q2 2025, following Q1 2026 revenue of $19.799 billion. The sequential trajectory — $17.601B (Q3 2025) → $19.292B (Q4 2025) → $19.799B (Q1 2026) → $22.974B (Q2 2026) — shows consistent double-digit sequential expansion, and the segment mix confirms the driver: Cardiometabolic Health generated $18.353 billion, dwarfing Oncology ($2.570B), Immunology ($1.417B), and Neuroscience ($0.429B). This concentration is both the growth engine and the key risk — the investment case is effectively a leveraged bet on incretin franchise durability, with the remaining ~20% of revenue providing diversification but not growth leadership.
Profitability is elite and expanding. Q2 2026 net income was $7.095 billion on a 30.88% net margin, with gross margin at 85.78% and operating margin at 54.22% — up from 49.39% in Q1 2026 and 46.59% in Q4 2025, demonstrating clear operating leverage as revenue scales faster than the cost base. R&D spend of $3.819 billion (16.6% of revenue) remains substantial but is being absorbed comfortably by gross profit of $19.706 billion. The Q2 net margin of 30.88% was slightly below Q1's 37.36%, largely due to a $3.21 billion swing in other income/expenses, but the underlying operating margin expansion from 49.4% to 54.2% is the more meaningful signal of durable earnings power.
Balance sheet and cash generation are strong but capital-intensive. TTM free cash flow is $20.054 billion, with Q2 2026 FCF of $7.757 billion on operating cash flow of $10.690 billion against $2.933 billion of capex — a healthy 72.6% FCF conversion. However, the company is deploying enormous capital: $8.747 billion of acquisitions and $11.577 billion of debt repayment in Q2 alone, funded partly by $8.426 billion of net financing inflows. Debt-to-equity of 1.60 and a current ratio of 1.58 indicate a leveraged but liquid balance sheet, while ROE of 77.78% and ROA of 20.36% reflect extraordinary capital efficiency. The dividend is modest (0.56% yield, 26.1% payout ratio), preserving flexibility for manufacturing buildout and M&A.
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 net income is strongly positive ($7.095 billion in Q2 2026), the PE ratio is the appropriate primary metric. LLY trades at 46.58x trailing earnings but only 26.48x forward earnings — a 43% compression that implies the market expects substantial EPS growth, consistent with consensus 2026 EPS of $67.55 versus the trailing run-rate. The PEG ratio of 0.48 is the standout data point: it suggests the stock is cheap relative to its growth rate, a rare configuration for a mega-cap and the core of the bull case.
Against the broader Drug Manufacturers - General industry, LLY's 46.58x trailing PE and 14.81x PS represent a substantial premium — large-cap pharma peers typically trade in the high-teens to low-20s on earnings. The premium is justified by growth: 47.67% YoY revenue growth and 54.22% operating margins are far above the sector norm, and the forward PE of 26.48x is far more reasonable when measured against expected EPS expansion. The EV/EBITDA of 31.57x and P/B of 36.37x are extreme, but the latter reflects an asset-light, high-ROE business model (77.78% ROE) rather than balance-sheet leverage alone.
Historically, LLY's PE has ranged from roughly 27.8x (Q1 2026) to over 200x during the 2024 earnings trough, with the trailing PE now at 46.58x — mid-to-upper range but well below the 2024 peaks. The PS ratio of 14.81x compares favorably to historical levels of 38–78x seen in 2024–2025, reflecting the massive revenue base expansion. The stock is therefore not at a historical valuation extreme on a sales basis, and the forward PE of 26.48x versus a trailing 46.58x suggests the market is pricing in continued earnings normalization rather than euphoria.
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 concentration and capital deployment. Cardiometabolic Health produced $18.353B of $22.974B in Q2 2026 revenue, so a pricing or share shock in incretins would hit roughly 80% of the top line directly. The balance sheet is leveraged at 1.60x debt-to-equity, and Q2 alone consumed $8.747B for acquisitions and $11.577B for debt repayment, partly funded by $8.426B of net financing inflows; capex of $2.933B against $10.690B operating cash flow shows the manufacturing buildout is capital-hungry. Earnings quality also wobbled — net margin fell from 37.36% in Q1 to 30.88% in Q2 on a $3.21B swing in other income/expenses — demonstrating that headline EPS can be volatile even when operating margins expand.
Market and competitive risks are dominated by valuation compression and new entrants. At 46.58x trailing and 31.57x EV/EBITDA, LLY trades at a steep premium to large-cap pharma peers in the high-teens to low-20s, so any deceleration invites multiple contraction rather than mere consolidation. The beta of 0.453 provides genuine macro insulation — the stock rose 53.41% over a year while SPY gained 15.53% — but that low beta did not prevent a 23.31% max drawdown, and sticky 3.7% inflation reviving Fed hike risk (per October 14 market commentary) pressures high-multiple growth names regardless of defensiveness. Competitive news flow is intensifying: Novo's oral Wegovy showing weight loss after switching from injections, Roche's enicepatide Phase 2 data, and Viking's VK2735 advancing to Phase 3 all narrow the perceived moat.
The worst-case scenario is a competitive and pricing shock coinciding with multiple compression. If oral Wegovy and enicepatide take meaningful share while payers push back on GLP-1 pricing, consensus 2026 EPS of $67.55 could be revised down and the forward multiple could compress from 26.48x toward the sector's high-teens, a double hit. From $1,257.03, a re-rating to the analyst low target of $930 implies roughly -26%, and a full retracement to the 52-week low of $783.85 implies approximately -38%. The stock's own 23.31% max drawdown over the trailing year shows such moves are historically plausible, not theoretical.