Key Takeaways
- Eli Lilly (LLY) stock gained 22% in the month through October 30, supported by strong third-quarter earnings, higher revenue guidance, and encouraging clinical trial results.
- Novo Nordisk (NVO) faces growing competition after Lilly’s experimental drug retatrutide outperformed Ozempic 2 mg in a Phase 3 diabetes trial.
- Lilly’s third-quarter revenue increased 39% to $24.4 billion, while volume growth of 53% outweighed a 15% decline in realized prices.
- At approximately 31x forward earnings following the report, below its five-year average of 40x, Lilly looks attractive relative to its historical valuation, although pricing pressure remains a risk.
Eli Lilly (LLY) stock gained 22% in the month through October 30, closing near $1,418 as strong earnings, encouraging clinical results, and growing demand for obesity treatments strengthened investor confidence.
Lilly gained approximately 10% in a week during mid-October, while Goldman Sachs raised its price target to $1,413 on October 20.
On October 28, Lilly announced that experimental drug retatrutide outperformed Ozempic 2 mg from Novo Nordisk (NVO) in a Phase 3 trial involving adults with type 2 diabetes.
Retatrutide reduced A1C by 2.2 percentage points versus 1.8 percentage points for Ozempic. Patients receiving retatrutide also lost 19.5% to 20.9% of their body weight, compared with 9.4% for Ozempic, strengthening Lilly’s potential competitive position.
Lilly’s third-quarter earnings provided another catalyst, sending shares nearly 7% higher on October 29.
Revenue increased 39% year over year to $24.4 billion, exceeding the $22.62 billion consensus estimate. Non-GAAP earnings reached $7.48 per share versus the $6.61 expected, including $4.57 per share in acquired in-process research and development (IPR&D) charges.
Mounjaro generated $10.72 billion in revenue, up 65%, while Zepbound contributed $5.35 billion, up 49%.
Management raised its 2026 revenue guidance to between $91 billion and $92 billion from its previous range of $85 billion to $87 billion.
Importantly, volume increased 53% despite a 15% decline in realized prices, showing that growing patient demand continues to outweigh pricing pressure.
CEO David Ricks said, “Lilly had another strong quarter, exceeding our prior expectations and allowing us to raise our full-year outlook.”
Undervalued or Overvalued?
Lilly looks attractive relative to its historical earnings multiple, although sustaining strong growth will be essential to justifying its valuation.
Before the earnings report, TIKR’s October 21 consensus estimates projected approximately $102 billion in 2027 revenue, compared with Lilly’s updated 2026 guidance midpoint of $91.5 billion.
However, management indicated that approximately $2 billion of 2026 revenue reflects non-recurring items, including milestones and rebate-estimate adjustments.
Excluding those items, Lilly would need approximately 14% revenue growth to reach that earlier 2027 estimate, making continued patient adoption particularly important.
Following the report, Lilly traded at approximately 31x forward earnings, below its five-year average of 40x and its October 2023 peak near 67x.
Strong obesity treatment demand, expanding patient access, and potential retatrutide commercialization support additional revenue and earnings growth over the next 12 months.
However, lower realized prices, non-recurring revenue, and uncertainty surrounding Medicare Bridge coverage after December 2027 could make future growth more challenging.
Overall, Lilly looks attractive relative to its historical valuation, making buying more compelling than taking profits for long-term investors, provided patient growth continues offsetting pricing pressure.
The company’s December 7 Innovation Day and first 2027 guidance, expected alongside fourth-quarter results in early 2027, will be important tests of that outlook.
So what is Eli Lilly stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
