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LLY Lilly (Eli)

pharma · valued with sonnet medium conviction · 2026-07-20

HOLD
wonderful · 82 ▟ wide moat circle of competence: edge ✓ would own for a decade trend up · +17.3% vs 200-DMA
Owner-earnings value$317.22
Price$1,179.11
Margin of safety -73.1%

Best-in-class GLP-1 moat and execution, but price already demands a decade of near-impossible 25% growth.

The business

Lilly discovers, manufactures, and sells branded prescription drugs, currently dominated by its GLP-1/GIP incretin franchise (Mounjaro, Zepbound, Trulicity) for diabetes and obesity, alongside oncology, immunology, and neuroscience drugs. Revenue comes from patent-protected molecules sold through payers and health systems, with earnings power tied to pricing, patent life, and R&D pipeline success.

Quality gate · 82/100

Returns on capital 28.7/30
Consistency 18.7/22
Margins / pricing power 15.9/16
Balance sheet 12.9/16
Cash conversion 0/10
Capital allocation 5.7/6
Median ROIC25.8%
Gross margin82.8%
Net debt / EBITDA0.9x
FCF conversion18%
Share count / yr-2.0%
Profitable years4/4

Moat & management

Moat ▟ wide moat
Sourceregulatory
Trajectorywidening
Managementexcellent

Patent exclusivity plus FDA approval barriers on tirzepatide give Lilly first-mover dominance in the still-expanding obesity/diabetes market, reinforced by manufacturing scale that competitors can't quickly replicate; near-term share gains and pipeline breadth (oral orforglipron, new indications) are widening the lead, though every individual drug's protection erodes on a fixed patent clock.

Heavy, disciplined reinvestment into manufacturing capacity and R&D has driven the incretin franchise's scale-up, leverage remains conservative (net debt/EBITDA ~0.9x), and modest buybacks (-2% share count CAGR) show no sign of empire-building or reckless dilution.

Owner-earnings inputs

Owner earnings (TTM)10.37B
Owner-earnings yield1.0%
Free-cash-flow yield1.0%
Growth used (normalized)11.0%
Market-implied growth (reverse DCF)25.0%
Terminal growth3.0%
Discount rate (hurdle)9.0%

Projected owner earnings

YrOwner earningsGrowthPV
111.51B 11.0%10.56B
212.71B 10.4%10.70B
313.96B 9.9%10.78B
415.26B 9.3%10.81B
516.59B 8.7%10.78B
617.94B 8.1%10.70B
719.30B 7.6%10.56B
820.65B 7.0%10.36B
921.97B 6.4%10.12B
1023.26B 5.9%9.83B
1124.49B 5.3%9.49B
1225.65B 4.7%9.12B
1326.71B 4.1%8.71B
1427.66B 3.6%8.28B
1528.49B 3.0%7.82B

Key risks

  • Patent cliffs on core incretin franchise and legacy drugs (e.g., Trulicity decline already underway) within the next decade
  • Drug pricing regulation (IRA negotiation, potential most-favored-nation policy) compressing US pricing power
  • Intensifying competition from Novo Nordisk and emerging oral GLP-1/generic entrants eroding share or pricing

Catalysts

  • Oral GLP-1 (orforglipron) launch expanding the addressable obesity/diabetes market beyond injectables
  • Label expansions into sleep apnea, cardiovascular, and Alzheimer's (donanemab) indications
  • Manufacturing capacity build-out normalizing capex and lifting FCF conversion from currently depressed levels

Recent news

score · 8 articles

  • ATAI Stock Slips After Blockbuster Week: Cathie Wood Calls $3.8B Lilly Deal ‘Well-Deserved’ Return For Shareholders
  • Why Did ATAI, PANW, TRV Stocks Surge To 52-Week Highs Last Week?
  • Cathie Wood Is Loading Up on This GLP-1 Stock That Has Soared 1,600% Over the Past 10 Years
  • 3 Biggest Pharma Giants: Buy, Sell or Hold?
  • Eli Lilly (LLY) Stock Looks Undervalued On Fair Value Yet Full On Earnings
  • Watch Out, Eli Lilly and Novo Nordisk: Viking Therapeutics Just Started Testing a Weight Loss Drug That Goes Beyond GLP-1
  • These 7 Stocks Are Analyst Favorites For Magnificent Earnings Growth; Google Holds Top Rating
  • The Most Overlooked Reason Eli Lilly Stock Keeps Surging -- and It Has Nothing to Do With Weight Loss

⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Price pays for ~25%/yr owner-earnings growth over 15y (reverse DCF); model credits 11%. · Rich vs our conservative value, but a quality business is not a short — stance is WAIT for a better price, not sell.

History

DateQualityPriceValueMoSRating
2026-10-28 82 $1,281.91 $439.53 -65.7% HOLD
2026-10-27 82 $1,279.14 $439.53 -65.6% HOLD
2026-10-26 82 $1,273.46 $414.89 -67.4% HOLD
2026-10-23 82 $1,306.69 $414.89 -68.2% HOLD
2026-10-22 82 $1,270.75 $414.89 -67.4% HOLD
2026-10-21 82 $1,283.66 $414.89 -67.7% HOLD
2026-10-20 82 $1,240.34 $414.89 -66.6% HOLD
2026-10-19 82 $1,257.03 $414.89 -67.0% HOLD
2026-10-16 82 $1,251.61 $414.89 -66.9% HOLD
2026-10-15 82 $1,208.74 $414.89 -65.7% HOLD
2026-10-14 82 $1,166.51 $414.89 -64.4% HOLD
2026-10-13 82 $1,182.62 $414.89 -64.9% HOLD
2026-10-12 82 $1,179.27 $414.89 -64.8% HOLD
2026-10-09 82 $1,169.60 $414.89 -64.5% HOLD
2026-10-08 82 $1,188.72 $414.89 -65.1% HOLD
2026-10-07 82 $1,157.49 $414.89 -64.2% HOLD
2026-10-06 82 $1,143.12 $414.89 -63.7% HOLD
2026-10-05 82 $1,142.85 $414.89 -63.7% HOLD
2026-10-02 82 $1,149.85 $414.89 -63.9% HOLD
2026-10-01 82 $1,157.08 $414.89 -64.1% HOLD
2026-09-30 82 $1,184.63 $414.89 -65.0% HOLD
2026-09-29 82 $1,184.78 $414.89 -65.0% HOLD
2026-09-28 82 $1,183.46 $414.89 -64.9% HOLD
2026-09-25 82 $1,181.89 $414.89 -64.9% HOLD
2026-09-24 82 $1,150.99 $414.89 -64.0% HOLD
2026-09-23 82 $1,170.14 $414.89 -64.5% HOLD
2026-09-22 82 $1,164.89 $414.89 -64.4% HOLD
2026-09-21 82 $1,152.93 $414.89 -64.0% HOLD
2026-09-18 82 $1,152.44 $414.89 -64.0% HOLD
2026-09-17 82 $1,137.82 $414.89 -63.5% HOLD
2026-09-16 82 $1,136.11 $414.89 -63.5% HOLD
2026-09-15 82 $1,138.28 $414.89 -63.6% HOLD
2026-09-14 82 $1,115.70 $414.89 -62.8% HOLD
2026-09-11 82 $1,123.00 $414.89 -63.1% HOLD
2026-09-10 82 $1,124.21 $414.89 -63.1% HOLD
2026-09-09 82 $1,123.91 $414.89 -63.1% HOLD
2026-09-08 82 $1,149.36 $414.89 -63.9% HOLD
2026-09-07 82 $1,149.36 $414.89 -63.9% HOLD
2026-09-04 82 $1,159.60 $414.89 -64.2% HOLD
2026-09-03 82 $1,160.08 $414.89 -64.2% HOLD
2026-09-02 82 $1,160.00 $414.89 -64.2% HOLD
2026-09-01 82 $1,156.73 $414.89 -64.1% HOLD
2026-08-31 82 $1,174.61 $414.89 -64.7% HOLD
2026-08-28 82 $1,176.10 $414.89 -64.7% HOLD
2026-08-27 82 $1,189.41 $414.89 -65.1% HOLD
2026-08-26 82 $1,233.66 $414.89 -66.4% HOLD
2026-08-25 82 $1,246.93 $414.89 -66.7% HOLD
2026-08-24 82 $1,255.40 $414.89 -67.0% HOLD
2026-08-21 82 $1,244.40 $414.89 -66.7% HOLD
2026-08-20 82 $1,280.34 $414.89 -67.6% HOLD
2026-08-19 82 $1,225.73 $317.22 -74.1% HOLD
2026-08-18 82 $1,180.16 $317.22 -73.1% HOLD
2026-08-17 82 $1,180.16 $317.22 -73.1% HOLD
2026-08-14 82 $1,209.00 $317.22 -73.8% HOLD
2026-08-13 82 $1,220.28 $317.22 -74.0% HOLD
2026-08-12 82 $1,215.02 $317.22 -73.9% HOLD
2026-08-11 82 $1,231.94 $317.22 -74.3% HOLD
2026-08-10 82 $1,185.71 $317.22 -73.2% HOLD
2026-08-07 82 $1,191.94 $317.22 -73.4% HOLD
2026-08-06 82 $1,169.86 $317.22 -72.9% HOLD
2026-08-05 82 $1,115.68 $317.22 -71.6% HOLD
2026-08-04 82 $1,148.84 $317.22 -72.4% HOLD
2026-08-03 82 $1,148.84 $317.22 -72.4% HOLD
2026-07-31 82 $1,154.97 $317.22 -72.5% HOLD
2026-07-30 82 $1,210.02 $317.22 -73.8% HOLD
2026-07-29 82 $1,197.53 $317.22 -73.5% HOLD
2026-07-28 82 $1,197.53 $317.22 -73.5% HOLD
2026-07-27 82 $1,185.87 $317.22 -73.2% HOLD
2026-07-24 82 $1,185.87 $317.22 -73.2% HOLD
2026-07-23 82 $1,163.01 $317.22 -72.7% HOLD
2026-07-22 82 $1,175.41 $317.22 -73.0% HOLD
2026-07-21 82 $1,146.90 $317.22 -72.3% HOLD
2026-07-20 82 $1,179.11 $317.22 -73.1% HOLD
2026-07-17 82 $1,169.17 $336.07 -71.3% HOLD
2026-07-16 82 $1,156.63 $336.07 -70.9% HOLD
2026-07-15 82 $1,181.87 $336.07 -71.6% HOLD
2026-07-14 82 $1,181.87 $336.07 -71.6% HOLD
2026-07-13 82 $1,188.58 $336.07 -71.7% HOLD
2026-07-10 82 $1,216.95 $336.07 -72.4% HOLD
2026-07-09 82 $1,215.83 $336.07 -72.4% HOLD
2026-07-08 82 $1,235.56 $336.07 -72.8% HOLD
2026-07-07 82 $1,200.06 $336.07 -72.0% HOLD
2026-07-06 82 $1,213.91 $336.07 -72.3% HOLD
2026-07-03 82 $1,213.91 $336.07 -72.3% HOLD
2026-07-02 82 $1,191.74 $336.07 -71.8% HOLD
2026-06-25 82 $1,117.26 $266.83 -76.1% STRONG SELL
2026-06-23 82 $1,107.08 $266.83 -75.9% STRONG SELL