Eli Lilly LLY
What does Eli Lilly do?
Eli Lilly develops, manufactures and markets prescription medicines for human use. The company operates in the US, Europe, China, Japan and other markets. Its focus is on metabolic diseases, which include insulins such as Humalog and Humulin, as well as Mounjaro, Trulicity and Jardiance for type 2 diabetes and Zepbound for obesity. It also has an oncology business with products such as Cyramza, Erbitux, Inluriyo and Jaypirca, as well as other therapeutic areas.
Eli Lilly generates revenue by selling patent-protected drugs, mainly through wholesalers, pharmacies and healthcare systems. Revenue depends heavily on reimbursement decisions by health insurers and government bodies. Competitively, the company is one of the large global pharmaceutical groups and is a defining player in the market for diabetes and obesity therapies, where it competes mainly with Novo Nordisk. Its own research and manufacturing network, along with the development of new active ingredients, supports its position.
Score profile
Rank vs. Drug Manufacturers - General (15 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Eli Lilly ranks among the best in the group Drug Manufacturers - General (9.5/10). On growth, the company ranks among the best in the group Drug Manufacturers - General (9.3/10). On valuation (higher = cheaper), the stock ranks below average in the group Drug Manufacturers - General (2.5/10). On financial strength, Eli Lilly ranks below average in the group Drug Manufacturers - General (3.4/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 28.4x | 16.4x | better than 3 % |
| Trailing P/E | 46.5x | 32.3x | better than 27 % |
| PEG ratio | 1.3x | 3.3x | better than 89 % |
| EV/EBITDA | 28.0x | 13.4x | better than 3 % |
| Price/sales | 14.8x | 4.4x | better than 3 % |
| Price/book | 31.7x | 6.8x | better than 4 % |
| Revenue growth | 38.6% | 5.6% | better than 97 % |
| Earnings growth | 16.3% | -5.3% | better than 89 % |
| Gross margin | 83.6% | 74.2% | better than 97 % |
| Operating margin | 53.7% | 34.3% | better than 97 % |
| Net margin | 31.9% | 15.7% | better than 90 % |
| Return on equity | 86.0% | 20.0% | better than 97 % |
| Debt/equity | 122.9% | 119.9% | better than 43 % |
| Current ratio | 1.4x | 1.4x | better than 57 % |
| Free cash flow yield | 0.7% | 4.4% | better than 3 % |
| Dividend yield | 0.5% | 2.2% | – |
| Payout ratio | 21.7% | 60.8% | – |
| Beta | 0.39 | 0.37 | – |
Valuation: what is Eli Lilly worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Eli Lilly a model range of 654.36 USD to 826.94 USD per share.
29 analysts, average rating “Buy”, average price target 1,453.40 USD (+1.4%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Demand for diabetes and obesity therapies largely determines the company's revenue and earnings.
- Successful research and approvals of new active ingredients secure the replacement of products losing patent protection and broaden the product range.
- Manufacturing capacity and supply capability determine how much of the demand for sought-after drugs can be met.
Risks
- Patent expirations and generic or biosimilar competition can significantly reduce revenue from established drugs.
- Pricing pressure from government regulation, reimbursement rules and negotiations with payers weighs on margins.
- Dependence on a few high-revenue products increases vulnerability to setbacks, safety concerns or competitive pressure.
What to look for with Eli Lilly
Revenue growth of the key individual products is informative because earnings power is closely tied to a few patent-protected drugs.