ELI LILLY & Co (LLY)

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AI: Overvalued

Price checkThe shares look expensive even after allowing for unusually fast earnings growth.

At $1,180.16, Lilly costs 32.3–33.2 times management’s 2026 adjusted earnings guide of $35.50–$36.50 per share. That multiple means buyers pay more than $32 for each guided earnings dollar. A 25-times valuation would require about $47.21 of annual earnings, 29–33% above the guide. Against 2025 reported earnings, the multiple is 51.4. Free cash flow was $8.97 billion, only about 0.85% of current market value. Exceptional growth softens the judgment, but these expectations leave too little room for disappointment, supporting Overvalued.

Big pictureCash generation is surging, but expansion spending and rising debt reduce downside protection.

Free cash flow—cash left after operations and capital spending—rose from $3.76 billion in 2024 to $8.97 billion in 2025, then reached $10.76 billion in the first half of 2026. However, debt climbed from $42.50 billion at year-end to $54.91 billion by June, against $8.95 billion cash. Current assets still exceeded near-term bills by $16.93 billion. Lilly also spent $3.96 billion on buybacks and $3.09 billion on dividends during the half; diluted shares fell 0.7%, so dilution is contained, but debt-funded expansion limits the safety cushion.

Business strengthDemand is exceptional, though two medicines now carry most of the growth burden.

Second-quarter revenue rose 48% to $22.97 billion. Mounjaro grew 91% to $9.94 billion and Zepbound grew 46% to $4.93 billion; together they supplied 64.7% of company sales. Sales volume increased 60%, while average realized prices fell 13%, showing demand is overcoming substantial price pressure for now. Gross margin—sales remaining after production costs—reached 85.8%, while Lilly reinvested $3.82 billion, or 17% of revenue, in research. Medicine demand is not strongly economic-cycle dependent, but earnings are increasingly tied to obesity-drug reimbursement, supply and product life cycles.

What could change the storyNew launches could justify the premium, while weaker pricing would expose the valuation.

The strongest bull case is that Foundayo, retatrutide and added manufacturing capacity extend rapid growth beyond Mounjaro and Zepbound. Management now expects 2026 revenue of $85–$87 billion, 30–34% above 2025. Sustained growth above 20%, moderating price declines and falling debt would strengthen the valuation case. The bear case is concrete: realized prices already fell 13%, two medicines generate nearly two-thirds of sales, and retatrutide remains unapproved. Even valuing guided earnings at a generous 30 times gives $1,065–$1,095 per share, still below the observed price.

$1,180.16 price considered

AI: News

Growth and guidance surgeSecond-quarter sales surged, and higher guidance showed obesity-drug demand remained stronger than expected.

On August 5, Lilly reported second-quarter revenue of $22.97 billion, up 48%, and reported earnings of $7.94 per share despite $3.03 per share of acquired-research charges. It raised full-year revenue guidance to $85–$87 billion. Historical data show the shares closed 4.9% higher that day. The timing is consistent with a favorable earnings response, although it does not prove the report alone caused the move. Higher sales and guidance directly increased expected future earnings.

Retatrutide trials succeedLate-stage trial wins strengthened Lilly’s next obesity franchise, but approval still depends on regulators.

On July 23, Lilly said retatrutide produced average weight loss of up to 20.8% in adults with diabetes and 22.6% in adults with severe obesity and cardiovascular disease after 80 weeks. The company now has five positive late-stage studies and plans a U.S. application in the first quarter of 2027. Shares rose 2.0% that day; the timing is consistent with optimism but does not establish causation. Approval could extend Lilly’s obesity leadership, while trial side effects and regulatory review remain material uncertainties.

Foundayo wins approvalApproval of a convenient weight-loss pill broadened Lilly’s market beyond weekly injections.

On April 1, the U.S. Food and Drug Administration approved Foundayo, Lilly’s once-daily obesity pill. Participants on the highest dose lost an average of 27 pounds in the main trial. Lilly launched with commercial-insurance pricing starting at $25 monthly and self-pay pricing of $149. The pill removes injection and food-timing barriers, potentially expanding demand and easing device-related manufacturing constraints. No sufficiently clean one-day market reaction was established, so the business significance is stronger than any claim about immediate price causation.

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010	2009	2008	2007
Revenue	$65.18B	$45.04B	$34.12B	$28.54B	$28.32B	$24.54B	$22.32B	$21.49B	$19.97B	$21.22B	$19.96B	$19.62B	$23.11B	$22.60B	$24.29B	$23.08B	$21.84B	$20.37B	$18.63B
Research & development	$13.34B	$10.99B	$9.31B	$7.19B	$6.93B	$5.98B	$5.59B	$5.05B	$5.10B	$5.31B	$4.80B	$4.73B	$5.53B	$5.28B	$5.02B	$4.88B	$4.33B	$3.84B	$3.49B
Net income	$20.64B	$10.59B	$5.24B	$6.24B	$5.58B	$6.19B	$8.32B	$3.23B	−$204.1M	$2.74B	$2.41B	$2.39B	$4.68B	$4.09B	$4.35B	$5.07B	$4.33B	−$2.07B	$2.95B
Basic EPSper diluted share	$23.00	$11.76	$5.82	$6.93	$6.15	$6.82	$8.93	$3.14	-$0.19	$2.59	$2.27	$2.23	$4.33	$3.67	$3.90	$4.58	$3.94	-$1.89	—
Diluted EPSper diluted share	$22.95	$11.71	$5.80	$6.90	$6.12	$6.79	$8.89	$3.13	-$0.19	$2.58	$2.26	$2.23	$4.32	$3.66	$3.90	$4.58	$3.94	-$1.89	—

Review source filings at SEC.gov ↗

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys9$4.54M disclosed value

Sells (SEC code S)525$82.42B disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Jun 10, 2026Form 4 · 10b5-1	Yuffa IlyaEVP&Pres, LLY USA&Global Capab	SellCommon Stock	2.5K	$1.2K	$2.88M	29.8K
May 6, 2026Form 4	LILLY ENDOWMENT INCOther	SellCommon Stock	2.2K	$996.18	$2.20M	91.88M
May 6, 2026Form 4	LILLY ENDOWMENT INCOther	SellCommon Stock	13.6K	$995.23	$13.56M	91.88M
Jan 7, 2026Form 4	LILLY ENDOWMENT INCTenPercentOwner	SellCommon Stock	2.7K	$1.1K	$3.06M	91.90M
Jan 7, 2026Form 4	LILLY ENDOWMENT INCTenPercentOwner	SellCommon Stock	2.2K	$1.1K	$2.47M	91.90M

Review ownership filings at SEC.gov ↗

ELI LILLY & Co (LLY)

Financial charts

Financial statements

Insider buys & sells