Stock performance snapshot and business scale

Eli Lilly (LLY) has drawn fresh attention after its recent trading, with the stock closing at US$1,015.75 and showing mixed short term returns, including a gain over the past month along with a decline over the past 3 months.

With a market value of about US$882.7b and annual revenue of US$72,249m, the company is among the largest global pharmaceutical players, spanning cardiometabolic, oncology, immunology and neuroscience treatments.

After a softer patch earlier in the year, Eli Lilly’s share price has picked up momentum again, with a 9.27% 1 month share price return sitting against a year to date decline of 5.98% and a 1 year total shareholder return of 43% that keeps the longer term picture strong.

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With Eli Lilly trading around US$1,015.75, strong multiyear returns behind it and some valuation models suggesting a premium, the key question is whether this represents an entry point or a stock that already reflects future growth.

Most Popular Narrative: 14.6% Undervalued

At a last close of $1,015.75, the leading narrative on Eli Lilly sets a fair value closer to $1,189.18, suggesting meaningful upside in that storyline.

Mounjaro/Zepbound: Lilly’s tirzepatide franchise is the engine of growth. Mounjaro (for type 2 diabetes) and Zepbound (obesity) each grew rapidly in 2024. Analysts project Mounjaro sales of $18.4 B in 2025 and $22.8B in 2026, and Zepbound jumping from $4.9B (2024) to $12.5 B in 2025 (and $18.1B in 2026). In other words, Lilly’s tirzepatide sales are expected to surpass Novo’s by 2026.

Want the full story behind that valuation gap? The narrative leans on strong revenue expansion, firm margins and a rich future earnings multiple to justify its higher fair value.

Result: Fair Value of $1,189.18 (UNDERVALUED)

However, there are key risks to keep in mind, including potential GLP-1 side effect concerns or lawsuits, as well as production or facility delays that could disrupt expected supply.

Another view on valuation

The narrative points to Eli Lilly trading 14.6% below a fair value of $1,189.18, but the picture changes when looking at earnings multiples. The stock trades on a P/E of 35.8x, richer than both peers at 23.3x and the US Pharmaceuticals industry at 15.3x, and only slightly below a fair ratio of 37.2x. That suggests the share price already embeds high expectations, so the main question is whether you think the business can continue to justify this premium over time.

Next Steps

Mixed signals on price and valuation today? Use this as a prompt to act quickly, review the figures for yourself, and weigh up the 3 key rewards and 2 important warning signs.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.