Pharmaceuticals: Major · #42 in the Retail 100

Eli Lilly

LLY

Paying for the AI build-out↑The weight-loss drug boom↑

Our rating: buylow conviction
12-month target: $1,857.17 +31.6%
Expected vs. S&P 500: +13.6 ptsSee the math
Next earnings: Feb 3In 90 daysEarnings calls page ↗

Lilly's latest quarter included about $900 million of one-time help, mainly Jardiance milestones with none left, so growth now has to come from selling more doses.

Summary

Eli Lilly makes Mounjaro and Zepbound, the best-selling diabetes and obesity injections, which bring in about two-thirds of its revenue. Revenue rose 39% last quarter even as prices fell 15%, and Lilly raised its 2026 forecast for the third time this year. Some of that was one-time help, and its new obesity pill sold less than expected. The stock depends on volume still beating price cuts in 2027.

$1,409.28

+$512.75 (+57.19%)Past year

What Eli Lilly does

Lilly's fortunes rest on one drug, tirzepatide, sold as Mounjaro for diabetes and Zepbound for obesity. It brought in two-thirds of revenue last quarter, and its main U.S. patent runs to 2036.^31,32,33

What it sells

Mounjaro and Zepbound65% of revenue, Q2 2026
Weekly injections that lower blood sugar and body weight. More than half of Mounjaro's sales now come from outside the U.S.
Other diabetes drugs15% of revenue, Q2 2026
Older diabetes medicines such as Jardiance, shared with Boehringer Ingelheim, and Trulicity, whose U.S. patent expires in 2027.
Cancer drugs11% of revenue, Q2 2026
Led by Verzenio for breast cancer, Lilly's largest drug outside diabetes and obesity.
Immunology drugs6% of revenue, Q2 2026
Taltz for psoriasis and arthritis, plus newer drugs for eczema and bowel disease.

Who buys it

Patients fill Lilly's prescriptions at pharmacies supplied by three wholesalers, McKesson, Cencora and Cardinal Health, which each handled 16% to 24% of 2025 revenue. A growing share pay cash through LillyDirect, Lilly's own online channel. The U.S. was 62% of revenue last quarter.

Where you've seen it

LillyDirect, Lilly's own website, where patients can pay cash for some of its medicines and get them delivered.

The backstory

Demand for tirzepatide, sold as Mounjaro and later Zepbound, outran Lilly's factories until the FDA declared the shortage over in late 2024, while pharmacies sold compounded copies. CEO David Ricks responded by committing more than $50B to U.S. plants since 2020. With supply now ample, the limit is price: in November 2025 Lilly agreed with the Trump administration to sell Zepbound at an average $346 a month on TrumpRx, trading price for volume.

How the business makes money

Why Lilly earns more even as Zepbound gets cheaper^{1,2,10,11,12,15,27,33,38}

Step 1
Lilly's new plants now make enough tirzepatide, sold as Mounjaro and Zepbound, to meet demand, so it no longer has to ration doses.
Step 2
Lower prices, like Zepbound at an average $346 a month on TrumpRx, bring in patients who could not pay before.
Step 3
Far more doses more than make up for the lower price. Revenue grew 39% last quarter, to $24.4B.
Step 4
Each extra dose is very profitable. Lilly keeps about 84¢ of each $1 of sales after the cost of making the drugs.
What shareholders get
Profits fund the next drugs, like retatrutide. Shareholders get a dividend plus a bet on growth: analysts expect 2027 earnings of $49.09 a share.

Advantages

Market leader in obesity injections

Major advantage

Lilly's biggest advantage. It held about 63% of the U.S. market for these obesity and diabetes drugs last quarter, with Novo holding most of the rest.^1,25,34

Factory capacity

Strong advantage

Hard to match quickly. After earlier plants ended the shortage, four more announced in February 2025 add capacity later, and Lilly has since broken ground on plants in Houston ($6.5B) and Richmond ($5B).^12,13,26,35

The next obesity drug is nearly ready

Strong advantage

Strong, if approved. Retatrutide produced 28.3% average weight loss at its highest dose in its main late-stage trial, and beat semaglutide in a head-to-head diabetes trial. Lilly plans to file for approval in early 2027.^1,14,35,37

What's changing

Volume is still winning, but one-time help and a slow pill are the watch items

Lilly raised its 2026 revenue forecast for the third time this year, to $91B to $92B, after revenue grew 39% last quarter. A temporary Medicare program has covered its obesity drugs since July. The weak spots are Foundayo, its obesity pill, which sold less than expected, and about $900M of one-time help that will not repeat in 2027.^{33,34,35,37,15,5}

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with Eli Lilly
Eli Lillythis stock	$1.33T	Lilly's fortunes rest on one drug, tirzepatide, sold as Mounjaro for diabetes and Zepbound for obesity. It brought in two-thirds of revenue last quarter, and its main U.S. patent runs to 2036.
Novo NordiskNVO	$174.47B	Danish maker of Wegovy and Ozempic; launched the first obesity pill in January 2026.	Novo pioneered these drugs, but Lilly now grows faster and holds a larger U.S. share.^5,23
PfizerPFE	$169.79B	Big drugmaker buying into obesity with Metsera's monthly shot, still in trials.	Pfizer's shot targets approval in 2028; Lilly is selling obesity drugs now.¹⁶
AmgenAMGN	$240.42B	Biotech testing MariTide, an obesity shot dosed monthly or less often.	Amgen bets on fewer doses; Lilly already has approved drugs and factories.¹⁷

Leadership

Who runs the company, and how the stock has done under the CEO.

LLY +429.9%S&P 500 +61.8%Price change since Nov 2021, the earliest data available

20222023202420252026

David RicksChair and CEO9.8 yrs, since 2017

Lucas MontarceEVP and CFO2 yrs

Daniel SkovronskyEVP, Chief Scientific and Product Offic…1 yrs

Kenneth CusterEVP and President, Lilly Cardiometaboli…1.4 yrs

Wall Street on Ricks: PositiveBerenberg upgraded Lilly to Buy with a $1,400 price target, citing strong returns on research spending and expecting revenue above Lilly's 2026 forecast. Guggenheim raised its price target to $1,284 on early but improving sales of the newly launched Foundayo.^L7,L9

Leadership sources (9) · researched Oct 2026

L1John C. Lechleiter to Retire as Lilly CEO; Board Elects David A. Ricks as Successor · Eli Lilly and Company / SEC, 2016-07-27
L2Ricks to succeed Lechleiter as Lilly chief · pharmaphorum, 2016-07-27
L3Lilly appoints Lucas Montarce as executive vice president and chief financial officer · Eli Lilly and Company, 2024-09-09
L4Earnings call transcript: Eli Lilly tops revenue forecasts in Q2 2026 · Investing.com, 2026-08-05
L5Lilly Announces Two New Executive Committee Members and Expansion of Leadership Roles to Prepare for Next Wave of Growth · Eli Lilly and Company / Finviz, 2025-11-06
L6Lilly announces transitions in executive leadership · Eli Lilly and Company / BioSpace, 2025-05-08
L7Berenberg upgrades Eli Lilly stock rating on obesity drug strength · Investing.com, 2026-09-15
L8Eli Lilly CEO tells CNBC one-third of new GLP-1 pill patients are taking Foundayo, as drugmaker ramps up production · CNBC, 2026-09-21
L9Guggenheim raises Eli Lilly stock price target to $1,284 on drug growth · Investing.com, 2026-09-18

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

As prices keep falling, will Lilly's 2027 revenue still grow about 14%, to the roughly $104 billion analysts expect?^{1,3,5,9,10,15,19,24,25,28,33,34,35,38}

Bull case: why buyers buy

Cheaper prices, Medicare coverage and new pills bring in millions more patients, so volume keeps outrunning price cuts and results beat estimates again.

Lower prices are bringing in far more patients. Revenue grew 39% last quarter and beat estimates by roughly $2B.
Medicare coverage is adding patients fast. More than 500,000 have filled prescriptions since July, and about 70% of new participants chose a Lilly obesity drug.
Analysts keep raising forecasts. Their 2027 earnings estimate rose to $49.09 a share from $45.08 three months ago.
Foundayo is gaining ground. About four in ten U.S. patients starting an oral obesity drug chose it, and its new patients doubled from the prior quarter.

Bear case: why sellers sell

If prices keep dropping and Novo's pill wins the newer patients, revenue growth slows sharply and a stock priced for growth has room to fall.

One-time help will not repeat. About $900M of last quarter's revenue was Jardiance milestones and rebate adjustments, and wider 2027 Medicare coverage may shift sales to lower prices.
The pill launch is still behind. Foundayo sold $184M, below the roughly $229M expected, and by Lilly's own figure most new oral patients still choose Novo's pill.
Growth is set to slow sharply. Analysts expect 2027 revenue growth of about 14%, against 46% for the first nine months of 2026.
Prices are falling fastest abroad. International prices fell 29% last quarter, largely because of China's insurance list.

Where Delphi landsbuyWe think the bull case is more likely than today's price assumes.See why

What to watch

The numbers that will settle the debate.

Volume growth versus price change▼ worsening

Third quarter: volume up 53%, price down 15%, revenue up 39%, versus volume up 60% and price down 13% in the second. U.S. prices fell 7%, helped by rebate adjustments.^33,1

Shows whether selling more doses still outweighs lower prices per dose.

Foundayo sales▲ improving

$184M in the third quarter, up from $98M but below the roughly $229M expected. About four in ten new U.S. oral obesity patients chose it.^33,34,35

Lilly's obesity pill, and the test of whether it can win a market Novo's Wegovy pill launched first.

Older diabetes, cancer and immunology drugs■ unclear

Third quarter: Verzenio $1.51B (up 3%), Trulicity $904M (down 14%), Taltz $856M (down 5%). Jardiance rose 65% to $1.58B on $410M of milestones.^36,33

These drugs are about a third of revenue and must keep growing as the obesity drugs' prices fall.

Next earnings report

Feb 3

In 90 days

Earnings calls page ↗

Expected earnings per share: $10.99
Expected revenue: —

What to listen for: Lilly's first 2027 guidance: whether volume still outruns falling prices once the one-time help fades and Medicare coverage widens, and whether Foundayo keeps gaining.^35,38

What would prove this wrong

✕Volume growth slows to near the rate prices are falling.
✕Foundayo stays far behind Novo's Wegovy pill as patients move to pills.
✕Retatrutide's filing slips or regulators raise safety concerns.
✕New government pricing rules cut tirzepatide prices well below current deals.

Our ratingBuyLow convictionas of Nov 2 close, $1,410.99 · what ratings mean

Estimates keep rising as volume outruns price cuts, and at about 30 times expected earnings, below its five-year typical 38, Lilly should beat the S&P 500 including dividends.

12-month target: $1,857.17 (+31.6%)
Plus dividend: +0.5%
S&P 500, same method, with dividends: +18.5%
Expected vs the market: +13.6 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $1,410.99

Target $1,857.17

bull case30% likely

$2,358.08 +67%

Medicare and lower prices bring in more patients than expected and Foundayo gains on Novo's pill, so 2027 revenue clearly tops the roughly $104B analysts expect.

$60.23 earnings per share × 39.2 = $2,358.08

base case50% likely

$1,773.56 +26%

Volume keeps outgrowing price cuts and 2027 revenue lands near the $104B consensus, with retatrutide, Lilly's next obesity drug, filed on schedule in early 2027.

$54.30 earnings per share × 32.7 = $1,773.56

bear case20% likely

$1,314.83 -7%

Price cuts deepen as one-time help fades and Novo's pill keeps most new pill patients, so 2027 revenue grows well under 14%.

$49.98 earnings per share × 26.3 = $1,314.83

Why these odds: Analysts raised 2027 earnings estimates from $45.08 to $49.09 over 90 days, and Lilly has beaten the last four quarters while raising revenue guidance again. The Foundayo miss and fading one-time help keep bull odds at 30%.

How the prices are built: Wall Street expects earnings per share of $54.30 for the year starting a year from now (analysts range from $45.66 to $66.16). Today the stock trades at 30.9 times next year's earnings per share; its five-year middle is 37.8.^{38,39,40,41,42,33,34}

What tests the call: Fourth-quarter 2026 earnings and first 2027 guidance (Feb 3)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 30; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $1,410.99, investors pay 66% more than they pay for the average stock's earnings

Eli Lilly trades at 31 times the earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's earnings. That is cheaper than it has been 80% of the time over the past five years, when the middle was 38.

Analysts expect earnings to grow about 19% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. The premium is a bet that Eli Lilly's earnings keep growing faster than the market's for years, not just next year.

Eli Lilly multiple: 31×
S&P 500 multiple: 19×
Base case: +26%
Bear case: −7%

The skewOur bear case loses about 27¢ for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.

Last earnings

Q3 2026 results, reported Oct 29

Mounjaro and Zepbound sold $16.1B, revenue beat estimates by roughly $2B, and Lilly raised its 2026 revenue forecast to $91B to $92B.^{33,34,35,36,37,43}

Reported Oct 29	Expected	Actual	Difference
Earnings per share	$6.36	$7.48	+17.6%
Revenue	—	—	—

Beat expectations in 7 of the last 7 quarters

Stock reaction: Up about 7% on the day (CNBC); closed at $1,373.70 per MarketScreener, up 6.6% from $1,288.30 the day before

Why the stock moved

Up: revenue of $24.4B beat estimates of about $22.1B to $22.6B, and Mounjaro and Zepbound topped estimates.
Up: the 2026 revenue forecast rose to $91B to $92B from $85B to $87B, the third raise this year.
Held back: Foundayo sold $184M against about $229M expected, and Verzenio, Taltz and Olumiant missed estimates.
Held back: about $900M of the quarter was one-time help, and $4.57 per share of deal charges cut earnings guidance.

What it means for the stock: Strengthened on volume, with caveats: revenue grew far faster than prices fell, but the gap narrowed and about $900M will not repeat. The pill is gaining but short of expectations.