Key Takeaways:
Eli Lilly (NYSE:LLY) carries a $1,415.89 price target, implying 19.67% upside from $1,183.16 as the first pharmaceutical company past $1 trillion.
"The model combines accelerating earnings, defensive beta, and pipeline blockbuster optionality," the 24/7 Wall St. research team said, issuing a buy rating at 90% confidence.
Lilly's Q2 revenue hit $22.974 billion, up 47.67% year over year, with EPS of $8.38 beating expectations. Management raised FY26 revenue guidance to $85 billion to $87 billion. Mounjaro delivered $9.9 billion in sales, up 91%, while Zepbound added $4.9 billion, together about 64% of quarterly revenue.
The bull case targets $1,627.17, or 37.53% upside, hinging on retatrutide, the triple GLP-1/GIP/glucagon agonist that produced weight loss approaching bariatric surgery levels across three positive Phase 3 trials. A BLA submission is planned for Q1 2027.
Retatrutide's label could span obesity, sleep apnea, and osteoarthritis, and AJMC has called it a "trillion-dollar drug." Lilly already owns roughly six of every 10 U.S. obesity prescriptions. Foundayo, the only oral GLP-1 approved for anytime dosing, jumped from 8,000 to 36,000 prescribers in a single quarter. The Medicare GLP-1 Bridge Program covers 20 million eligible Americans at $50 per month.
The bear case pins fair value at $1,174.96, essentially flat. Risks include U.S. realized prices falling roughly 9% excluding rebate adjustments, Novo Nordisk competing for share, and manufacturing capacity constraints. The Q2 tax rate spiked to 23.3% because of $2.78 billion in IPR&D charges from four acquisitions, though gross margin expanded to 85.8%.
Lilly's 32x forward earnings paired with 47.67% revenue growth compares favorably on a growth-adjusted basis. Novo Nordisk trades at a forward P/E of 14 with quarterly revenue growth of only 2.1% and earnings contracting 20.6% year over year. Merck's forward P/E is 50, with revenue growth of only 5.1% and EPS growth of negative 19.3%. The analyst consensus target sits at $1,310.90, below the 24/7 Wall St. model output.
The guidance raise signals management expects GLP-1 demand to keep accelerating. Investors will watch the retatrutide BLA submission in Q1 2027 and Foundayo's international expansion for the next leg of the story.
This article is for informational purposes only and does not constitute investment advice.
