Eli Lilly Expects Up To $87 Billion In 2026 Revenue. Here…

How GLP-1 drugs work

So first, let’s start with a few words about the GLP-1 market. This class of drugs interacts with hormonal pathways involved in the control of appetite and blood sugar levels — and as such, is the key to weight loss. These drugs are easy to self-administer weekly by injection, and just this year, both Lilly and Novo have also launched GLP-1 drugs in oral formulations. GLP-1 drugs have proven their safety and efficacy in clinical trials and in the real world, and individuals seeking to lose weight have rushed to get in on them.

A couple of years ago, regulators even announced a GLP-1 shortage, but Lilly and Novo ramped up production, and the products are now back on the shelves. Novo was earliest to market with its GLP-1 drugs, Ozempic for type 2 diabetes and Wegovy for weight loss, but as mentioned, Lilly has slipped ahead. Novo’s oral Wegovy, however, still has won more prescriptions than Lilly’s pill, Foundayo, but it’s important to keep in mind that oral Wegovy launched a few months earlier. So, it’s too early to draw conclusions about which company may dominate in the oral GLP-1 space.

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NYSE: LLY

Eli Lilly

Premium Feature

Moneyball Superscore

96/100

Today’s Change

(-0.18%) $-2.19

Current Price

$1,180.43

Key Data Points

Market Cap

$1.1TMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.

Day’s Range

$1172.58 – $1193.30

52wk Range

$783.85 – $1292.65

Volume

273K

Avg Vol

2.5M

Gross Margin

83.40%

Dividend Yield

0.57%

Demand for weight loss drugs has helped power Lilly’s revenue higher; in the recent quarter, for example, Mounjaro and Zepbound drove a 48% increase in total revenue to $23 billion. Together, they accounted for more than $14 billion of that revenue.

Eli Lilly’s valuation today

Now, let’s consider why Lilly still looks undervalued even after its big gains. Right now, Lilly trades for about 32x forward earnings estimates, which is below its levels of a few years ago, when revenue was considerably lower.

LLY PE Ratio (Forward) data by YCharts

Meanwhile, analysts are optimistic about revenue to come. As mentioned, Lilly forecasts as much as $87 billion for the current full year, and the average analyst estimate calls for revenue of more than $100 billion in the ing year.

At the same time, Lilly’s weight loss portfolio isn’t restricted to only a couple of products. The company has a solid weight loss drug pipeline, with exciting late-stage products that could be the revenue drivers of the future. For example, the pharma giant recently reported positive results from a phase 2 study of EloraTZP, a combination of eloralintide and tirzepatide — in the trial, it delivered greater weight loss than tirzepatide alone. Lilly aims to initiate a phase 3 trial before the end of the year. The company is also studying retatrutide, another candidate with potential for greater weight loss, in phase 3 studies.

This is positive because, in the future, if Lilly sells several weight loss drugs, it can suit the needs of a variety of individuals. Some may the convenience of a weight loss pill, while others may go for a drug that offers the potential for more or less weight loss, according to their particular needs.

The ongoing demand in today’s weight loss drug market and the strength of Lilly’s weight loss pipeline, which may produce additional drugs in the future, are reasons to believe that revenue could continue to march significantly higher. This is why today, even after its gains, Eli Lilly stock still looks undervalued.

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About the Author

Adria Cimino is a contributing Motley Fool stock market analyst covering healthcare, technology, and consumer goods sectors. Prior to The Motley Fool, Adria covered the European stock market and U.S. stocks pre-market trading for Bloomberg News, Bloomberg TV, and Bloomberg Radio for more than a decade. Earlier in her career, she wrote about biotech, medtech, and technology companies in Boston for Mass High Tech, an American City Business Journals publication. She holds a bachelor’s degree in mass communications from the University of South Florida.

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@adria_in_paris

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