/Lilly(Eli)%20%26%20Co%20logo%20on%20phone-by%20rafapress%20via%20Shutterstock.jpg)
Valued at $876.3 billion, Eli Lilly & Co. (LLY) is a mega-cap pharmaceutical company that focuses on creating and distributing groundbreaking treatments for obesity, diabetes, cancer, immunological disorders, and neurological conditions. Dedicated to enhancing patient health, Eli Lilly utilizes advanced biotechnology and genetic medicine to tackle some of the most critical health issues globally. With operations across the globe, LLY is headquartered out of Indianapolis.
LLY stock has been on a tear over the past year, driven by the blockbuster success of its Type II diabetes and obesity drugs, marketed as Mounjaro and Zepbound, respectively. LLY is up 68.6% over the past 52 weeks, and the shares have gained 58% on a YTD basis.
That's a considerable outperformance compared to the S&P 500 Index ($SPX), which is up 27.7% in the last 52 weeks, and about 17% so far in 2024.
LLY also has a solid dividend history, with its quarterly payout of $1.30 backed by nine years of consistent growth. Given the stock's meteoric rise, Lilly's current yield is a relatively modest 0.56%.
Eli Lilly Exceeds Q2 Expectations
The pharmaceutical company posted its Q2 earnings results earlier this month, with net income of $2.97 billion, or $3.92 per share on an adjusted basis, beating Wall Street’s estimate by a wide margin.
Revenue for the quarter stood at $11.3 billion, miles ahead of analysts' $9.83 billion forecast. The quarterly outperformance was led by blockbuster sales for its diabetes drug Mounjaro and weight-loss injection Zepbound, which together generated over $4 billion in sales during the period.
Looking ahead, Lilly hiked its annual revenue forecast by $3 billion to a range between $45.4 billion and $46.6 billion, and now expects adjusted earnings per share in the range of $16.10 to $16.60 - up by $2.60 from the earlier forecast.
Management attributed the upwardly revised guidance to “improved clarity into the timing and pace of the company's production expansions and planned Mounjaro launches outside the U.S.”
How Do Analysts Rate Eli Lilly Stock?
Analysts rate LLY stock a “Strong Buy” overall, with the consensus among the 22 analysts in coverage even slightly more bullish than it was earlier this summer. The stock has 20 “Strong Buy” ratings on Wall Street, up from 18 one month ago, along with 1 “Moderate Buy” and 1 “Hold” - down from 2 “Holds” last month.
After the earnings beat, Morgan Stanley (MS) analyst Terence Flynn named LLY as a “Top Pick,” while reiterating an “Overweight” rating on the stock and raising his price target from $1,083 to $1,106. The analyst upwardly revised his forecasts for Mounjaro and Zepbound post-earnings, and said he's also optimistic about the prospects for LLY's oral GLP-1 drug orforglipron, with phase 3 results expected in mid-2025.
“We believe LLY offers the most attractive opportunity in our coverage for upside to consensus estimates, despite the stock’s outperformance," concluded Flynn.
The mean price target for LLY is now $961.52, implying expected upside of about 4.5% to current levels. The Street-high price target of $1,117 suggests that Eli Lilly stock could rise as much as 21.4% from here.
At nearly 58x forward adjusted earnings, LLY stock is definitely priced for growth. On that basis, though, the pharmaceutical giant could be a reasonable pick; the stock's price/earnings-to-growth (PEG) ratio of 1.36 is a discount to the healthcare sector median.
On the date of publication, Ruchi Gupta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
