Lilly’s Powerful Growth Engine Could Still Have Room to Run

AI-generated source summary

The analysis focuses on Eli Lilly (LLY) and its stock valuation. The company's strong revenue growth, driven by key drugs like Mounjaro and Zepbound, is highlighted, with quarterly revenue up 48% year-over-year. Despite a 13% drop in average price collected, the gross margin has increased to 85.78%, largely due to lower production costs and a favorable product mix. The company plans significant manufacturing investment and has received favorable Medicare coverage for its weight-loss drugs, which now account for approximately 65% of its total revenue. The stock's P/E ratio is around 33x, but excluding a one-time R&D charge, it's closer to 30x, considered reasonable given the projected 25% earnings growth next year, potentially leading to a stock price of $1460. However, risks include potential competition from cheaper generics, upcoming lawsuits, and the possibility of growth slowing, which could lead to a stock price drop to $975 if the multiple contracts to 25x. Key watchpoints are Foundayo's prescription growth, Medicare volume, and the Retatrutide filing, with the stock's support level identified between $1146 and $1150.

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