Eli Lilly and Company LLY

Relative Valuation vs Own History (forward multiples on subsequently reported results)

DCF (WACC 9 to 10%, terminal growth 2 to 3%)

Peer Comparison (TTM P/E unless noted)

Price Targets

Risks

Catalysts

LLY remains the dominant franchise in the largest new pharmaceutical market of the decade, and the numbers support the premium. Revenue of $79.67b is compounding at ~45% with an 83.4% gross margin and a 54.2% operating margin, and the forward curve points to $88.70b NTM and $102.52b in FY+2. The critical question is valuation, and here the picture is genuinely mixed. At 26.5x current NTM EPS of $44.71, LLY sits 23% below its own 2 year average forward P/E of 34.3x, which on mean reversion implies $1530. But EV/Revenue at 11.1x versus a 6.6x average and P/BV at 31.1x versus 22.0x show the stock is expensive on capital and sales based measures, reflecting how far margins have already expanded.

The forward outlook is catalyst rich but not without risk. Orforglipron's 2026 oral launch and retatrutide readouts are the two levers that could reset the earnings curve higher, while the FY+2 EPS estimate of $47.25 implies only +5.7% growth off NTM, a deceleration that looks too conservative if volume momentum holds. Against that, pricing pressure, IRA exposure, and a heavy capex ramp are real drags, and insider selling alongside a 4538 drop in 13F holders signals some smart money is trimming.

I recommend accumulating LLY with a 12 month price target of $1350, ~30x NTM EPS, implying ~14% upside. This blends the mean reversion case on P/E with a conservative DCF base of $1,000 to $1,150, and it sits just below the sell side median of $1376. The setup favours investors willing to underwrite the orforglipron and retatrutide catalysts; the risk is that any efficacy or supply disappointment compresses a multiple that still embeds a lot of optimism on capital based measures.