How Eli Lilly’s 170% Mounjaro Price Hike in the UK Impacts Its Current Valuation

If you have been tracking Eli Lilly's stock lately, you know there has been plenty of chatter, and more than a few eyebrow-raising moves. Deciding what to actually do with LLY can feel like reading one page from a much longer novel. Over the past month, shares saw a notable slide of just over 12%. Zoom out and you will spot major gains over the last several years. Five-year returns top 400%, thanks in no small part to record-setting drug launches and a pipeline that keeps drawing interest from Wall Street.

Recent headlines are adding fuel to the debate. Eli Lilly just raised prices for its sought-after weight-loss drug, Mounjaro, in the UK by up to 170%, stirring new questions about future growth and risk. Meanwhile, the company is expanding Mounjaro's reach overseas and making tactical moves to strengthen footholds in emerging markets. However, U.S. policy changes could shake things up soon, with potential new tariffs and negotiations around medicine pricing coming into focus.

With volatility like this, should you jump in, hold tight, or take profits? To answer that, it is crucial to weigh how the market values Eli Lilly today. Using six major valuation checks, the stock is considered undervalued in only two of them, giving the company a valuation score of 2. This metric does not tell the whole story though, as every approach brings its own strengths and blind spots.

Next up, I will break down the individual valuation methods in detail, and at the end, look at a way to cut through the noise for an even clearer picture of whether LLY deserves a spot in your portfolio.

Eli Lilly delivered -24.7% returns over the last year. See how this stacks up to the rest of the Pharmaceuticals industry.

Approach 1: Eli Lilly Cash Flows

The Discounted Cash Flow (DCF) model estimates a company’s true worth by projecting future cash flows and then discounting those sums back to today’s value. For Eli Lilly, this approach takes current Free Cash Flow, forecasts its growth over time, and calculates what all those future inflows are really worth at present.

Currently, Eli Lilly reports Free Cash Flow of $2.25 billion. Analysts expect this figure to climb steadily, projecting Free Cash Flow to reach $54.19 billion by 2035. These projections reflect robust annual increases, supported by major product launches and sustained demand.

When these future numbers are discounted and totaled, the model calculates an intrinsic value of $1,156.46 per share. Compared with today’s market price, this DCF valuation suggests the stock is 38.5% undervalued. In other words, the model indicates notable upside from current levels based on Eli Lilly’s cash-generation potential.

Result: UNDERVALUED

Our DCF analysis suggests Eli Lilly is undervalued by 38.5%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: Eli Lilly Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used measure for valuing consistently profitable companies like Eli Lilly. It simplifies a complex business to how much investors are willing to pay for each dollar of current earnings, offering a quick pulse on whether the stock aligns with expectations for growth and stability.

Growth expectations and risk play a large role in what counts as a reasonable or “fair” PE. Fast-growing, innovative companies often justify premium multiples, while slower or riskier firms trade at discounts. A company’s sector also matters, as the pharmaceutical industry typically carries above-average PE ratios due to its history of innovation and resilient demand.

Currently, Eli Lilly trades at a PE multiple of 46.3x. This stands in sharp contrast with both its industry average of 19.6x and its peer group, where similar firms average 16.3x. Is this premium justifiable? The proprietary Fair Ratio, calculated to reflect company-specific strengths such as growth, margins, and market dynamics, sets an appropriate PE at 44.6x. Because Eli Lilly’s actual PE is just slightly above this Fair Ratio, the market is pricing its earnings almost exactly in line with valuation models.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Eli Lilly Narrative

A Narrative is a simple, focused story that connects your view of a company’s future—including fair value, revenue, earnings, and margins—to the actual financial forecast. This creates a bridge between numbers and the reasons behind them. Narratives go beyond just crunching figures. They let you easily articulate your reasoning and assumptions on the Simply Wall St platform, where millions of investors share and refine these outlooks together.

By using Narratives, you can clearly see how your expectations, whether optimistic or cautious, translate into a fair value. You can then compare this to the current market price, making it easier to decide when to buy, hold, or sell. These are not static guesses, but dynamic tools that automatically update as new news, analyst estimates, earnings results, or events happen. This helps keep your investment thesis current and relevant.

For Eli Lilly, the most optimistic Narrative projects a price target of $1,190, while the most cautious sees just $650. Your personal view and assumptions determine where you stand. Narratives make investment decisions more personal and empowered, ensuring your actions always fit your unique outlook.

Do you think there's more to the story for Eli Lilly? Create your own Narrative to let the Community know!

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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