The Setup
Shares of Eli Lilly (NYSE: LLY) have been on a tear for years, climbing nearly 400% in five years.
But after peaking near $970 last summer, the stock has fallen more than 25% from its highs and is down almost 9% year to date.
The trigger was disappointment over orforglipron, Lilly’s oral weight-loss pill that produced “good but not great” trial results.
That selloff has overshadowed everything else, including the fact that Lilly’s revenue is up 41% year to date, blockbuster GLP-1 drugs are posting multi-billion dollar sales, and the pipeline beyond obesity remains world-class.
When the market punishes a leader for not being perfect, it often leaves an opening for patient investors.
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Strategic Positioning
Eli Lilly is not just another pharma name. With a $670B market cap, it is the largest pure-play pharmaceutical company in the world.
The story today revolves around its GLP-1 franchise, drugs like Mounjaro (tirzepatide) for diabetes and Zepbound for weight management.
Together, they are reshaping the treatment landscape and driving exponential growth.
Beyond GLP-1s, Lilly is expanding in Alzheimer’s (donanemab, Kisunla), oncology (Verzenio), and immunology.
The company also invests aggressively in digital health and manufacturing scale, widening its competitive moat.
Few pharma peers can match its combination of revenue momentum, late-stage pipeline, and proven execution.
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Action Plan: Early Opportunity
For investors looking to “buy the dip” in a megacap name, Lilly stands out.
Entry Zone: Anywhere under $725 looks like a reasonable long-term entry.
Yield kicker: Dividend yield of ~0.85% is modest, but payout has grown double digits annually.
Upside Case: Analysts peg fair value around $887, implying 25%+ upside from current levels.
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Recent Momentum
The latest earnings told a clear story: growth remains extraordinary. Sales surged 41% in the first half of 2025 to $28B, matching what Lilly made in all of 2022.
Net income rose 21% year over year, margins remain north of 80%, and guidance for full-year EPS was raised.
Yet headlines fixated on orforglipron. The pill helped patients lose 12% of their weight in trials, but investors wanted 15%.
That gap sparked a selloff, despite the fact that Lilly still controls the leading injectable franchise and maintains pricing power in the hottest therapeutic category in healthcare.
Insiders clearly see value: Chairman Dave Ricks recently purchased more than $1M worth of stock on the open market.
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Growth Outlook
Obesity and diabetes remain the crown jewels. Goldman Sachs estimates the global obesity drug market could top $100B by 2030.
Even if orforglipron underwhelms, Mounjaro and Zepbound are still delivering 20%+ weight loss in trials, far ahead of competitors.
Beyond GLP-1s, the pipeline is robust:
Alzheimer’s: Donanemab recently won FDA approval, opening a multibillion-dollar market. Kisunla is also moving forward.
Oncology: Verzenio continues to gain share in breast cancer.
Immunology: New biologics are advancing in dermatology and autoimmune disease.
Wall Street expects revenue to grow ~14% annually and EPS ~21% through 2028. That is elite growth for a pharma giant already generating more than $50B in annual revenue.
Action Plan: Growth & Income
Compounder status: Lilly has grown EPS nearly 90% over the past year and pays out only ~36% of earnings as dividends. That leaves plenty of room for reinvestment and buybacks.
$1T potential: With revenue growth and pipeline depth, Lilly is a candidate to become the first $1 trillion healthcare stock.
Institutional favorite: Despite the pullback, more than 80% of shares remain held by institutions, signaling strong long-term conviction.
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Risks to Watch
Even a market leader carries risks. Key factors investors must monitor:
Pipeline execution
Orforglipron’s setback shows not every trial will hit. Overreliance on GLP-1 franchise creates concentration risk.
Drug pricing reform
U.S. policymakers are increasingly aggressive on drug price controls. Any cuts to Medicare reimbursement could impact margins.
Patent cliffs
While core GLP-1 drugs have long protection, other products will eventually face generic competition.
Competition
Novo Nordisk remains a formidable rival in obesity. Smaller biotech firms (like Viking or Structure) could emerge in the oral GLP-1 space.
Debt load
Debt-to-equity ratio above 200% is elevated. Strong cash flows offset this, but leverage is worth watching.
Valuation risk
Even after a 25% decline, shares trade at ~46x earnings. A further de-rating is possible if growth expectations slip.
Technical Setup
Shares trade around $710, well below the 52-week high of $972 but comfortably above the low near $624.
Support sits around $700, with resistance near $750. A break above that range could set up a move toward $800.
For long-term holders, volatility may be noise, but traders can use these levels to time entries.
Final Take
Eli Lilly has been knocked down by disappointment in one drug trial, but the broader story has not changed.
Its GLP-1 portfolio remains dominant, Alzheimer’s drugs are opening new markets, and oncology and immunology pipelines provide additional growth.
With revenue up more than 40% year to date, EPS compounding at 20%+, and shares trading more than 25% below their highs, this is a rare chance to buy a global healthcare leader at a relative discount.
For investors willing to hold through noise around individual drug data, Lilly offers one of the clearest long-term growth stories in the market today.
Action Recap |
That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.
Best Regards,
— Adam Garcia
Elite Trade Club
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