Eli Lilly (LLY) Hits $1 Trillion Milestone: What Does the Valuation Tell Us After This Breakthrough?

Eli Lilly has crossed the $1 trillion market capitalization milestone, making it the first healthcare company to do so. This achievement comes as investors show enthusiasm for its leadership in obesity and diabetes care.

See our latest analysis for Eli Lilly.

Eli Lilly’s stock has been on a tear, with a year-to-date share price return of 36% and a standout 28% gain just in the last month, as groundbreaking progress in obesity and diabetes drugs continues to dominate headlines. Recent momentum has been boosted not only by talk of a potential stock split and the landmark Board appointment of Dr. Carolyn Bertozzi, but also by new partnerships designed to improve access to weight management treatments and an expanded R&D presence in Philadelphia. Momentum is clearly building. Eli Lilly's astonishing 1-year total shareholder return of 42.7%, and a five-year figure well north of 650%, underline its status as a top-performing healthcare stock with long-term staying power.

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Yet with the stock trading at all-time highs and optimism seemingly priced in, investors are left to wonder: Is Eli Lilly still undervalued given its growth prospects, or has the market already accounted for what lies ahead?

Most Popular Narrative: 10.9% Undervalued

At $1,059.70, Eli Lilly's shares sit below the narrative's estimated fair value of $1,200. According to eat_dis_watermelon, this perspective comes from bullish expectations around the company’s next five years.

Mounjaro/Zepbound: Lilly’s tirzepatide franchise is the engine of growth. Mounjaro (for type 2 diabetes) and Zepbound (obesity) each grew rapidly in 2024. Analysts project Mounjaro sales of $18.4 B in 2025 and $22.8B in 2026. Zepbound sales are projected to rise from $4.9B in 2024 to $12.5 B in 2025 and $18.1B in 2026. In other words, Lilly’s tirzepatide sales are expected to surpass Novo’s by 2026.

Read the complete narrative.

What’s behind this premium price target? The narrative leans on blockbuster sales momentum, long-term exclusivity, and fiercely ambitious financial projections that rival dream-run stories in the sector. Discover which financial drivers create this confidence and what needs to go right to get there.

Result: Fair Value of $1200 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, supply chain delays or unexpected safety concerns could quickly reshape the outlook. This serves as a reminder to investors that future growth is not guaranteed.

Find out about the key risks to this Eli Lilly narrative.

Another View: It Looks Expensive by This Measure

While the earlier narrative points to Eli Lilly being undervalued, a look at its price-to-earnings ratio tells a different story. At 51.5 times earnings, Lilly trades well above both the US pharmaceuticals industry average of 19.9 and the peer group’s 15.6. It also surpasses its fair ratio of 43.9. This large premium could leave investors more exposed if expectations ease, or it could signal the market is betting big on future growth. Which side of the valuation debate will ultimately prove right?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Eli Lilly Narrative

If you see things differently or want to dig deeper into Eli Lilly's numbers, you can build your own personalized perspective in just a few minutes: Do it your way

A great starting point for your Eli Lilly research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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