Market context for Eli Lilly

Eli Lilly (LLY) has been quietly grinding higher, with the stock up about 4% over the past month and nearly 39% in the past 3 months, far outpacing the broader market.

That move fits into a powerful run, with a roughly 36.5% year to date share price return and a 37.4% one year total shareholder return. This suggests momentum is still very much building rather than fading.

If Lilly’s surge has you rethinking healthcare exposure, this could be a good moment to explore other quality names using our healthcare stocks as a starting shortlist.

With shares near 1,062 dollars and only a small gap to Wall Street targets, yet still showing double digit earnings and revenue growth, is Eli Lilly undervalued or is the market already pricing in its next leg higher?

Most Popular Narrative: 10.7% Undervalued

Based on the most followed narrative, Eli Lilly’s fair value sits meaningfully above the last close, framing today’s price as a potential discount to long term growth.

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.

According to eat_dis_watermelon, this valuation leans on compound revenue expansion, rising margins and a rich future earnings multiple. If you are curious how those levers combine to justify a price well above today’s level, and what growth runway they are baking in over the next decade, despite rising competition and capacity constraints, you will need to unpack the full narrative to see how each assumption shapes that target.

Result: Fair Value of $1189.18 (UNDERVALUED)

However, there is still meaningful risk that capacity expansions slip or safety concerns flare; either of these could rapidly cool the current momentum.

Another Take on Valuation

Our valuation checks paint a sharper picture. On earnings, Lilly trades at about 51.7 times profits versus a fair ratio of 43.1 and only 19.7 for the wider US pharma group, and roughly 16.8 for peers. That rich gap implies far less room for execution slip ups or GLP 1 disappointments.

Build Your Own Eli Lilly Narrative

If you see things differently, or prefer to dig into the numbers yourself, you can build a personalized view in just a few minutes: Do it your way.

A great starting point for your Eli Lilly research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

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• Lock in potential value by reviewing these 908 undervalued stocks based on cash flows that may still be trading at attractive prices before the broader market catches on.
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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.