Is Eli Lilly Stock a Buy Right Now? A Deep Dive into Growth and Risks
41min read Eli Lilly (NYSE: LLY) has emerged as a leader in the booming diabetes and obesity drug markets, thanks to its blockbuster therapies like Mounjaro and Zepbound. But with rising competition, regulatory pressures, and high valuations, investors are asking: Is this stock still worth buying? Let’s dissect the data to find out.
Recent Financial Performance: Strong, but Not Without Hurdles
Eli Lilly’s Q1 2025 results, released in early May, are expected to show $7.2 billion in revenue, a 5.8% increase from Q1 2024. Analysts project an EPS of $4.72, driven by continued demand for its GLP-1 receptor agonists. However, 2024 was a mixed year:
- Total 2024 revenue hit $45 billion, up 32% year-over-year, but missed initial guidance by $400 million due to supply chain bottlenecks and slower-than-expected adoption of Zepbound.
- Q4 2024 revenue reached $13.5 billion, with Mounjaro contributing $3.5 billion and Zepbound $1.9 billion.
The stock has surged 33% in 2024, but volatility persists. A 14.5% jump in April 2025 followed positive late-stage trial results for orforglipron, an oral weight-loss drug that could reshape the market.
Key Products: Dominance in Diabetes and Obesity
- Mounjaro (semaglutide): Generated over $5 billion in 2024, treating both diabetes and obesity. Its dominance faces pressure from European price negotiations and competition from Novo Nordisk’s Wegovy, but global expansion (e.g., China) offers growth.
- Zepbound (daptafermin): Despite slower adoption due to high costs ($3,500 annually) and logistical hurdles, Q4 sales hit $1.9 billion. Management is exploring cost-sharing programs to boost uptake.
- Orforglipron (new oral therapy): The star of 2025. Phase 3 trial results showed 16 lbs of weight loss and a safe profile, positioning it to rival injectables. Analysts project peak sales of $11.8 billion by 2030.
Strategic Initiatives: R&D and Manufacturing
- R&D Investment: Lilly spent $3.1 billion (18% of revenue) in 2024, focusing on genetic medicines (e.g., sickle cell anemia treatments) and oncology therapies like Verzenio.
- Manufacturing Expansion: Plans to boost GLP-1 production by 60% in 2025 aim to address past supply constraints. CEO David Ricks emphasized scalability as critical to meeting demand.
Risks and Challenges
- Pricing and Regulation:
- U.S. inflation-reduction policies and European price caps could compress margins.
- The DOJ is investigating drug pricing practices, alongside peers like Novo Nordisk.
- Competition:
- Novo Nordisk’s Wegovy and Ozempic dominate the injectable market.
- Pfizer’s withdrawal of danuglipron (due to liver toxicity) reduced competition, but rivals like Viking Therapeutics’ VK2735 loom.
- Operational Risks:
- Supply chain delays or quality issues could disrupt therapy distribution.
- Clinical trial delays in genetic medicines (e.g., imlunestrant) might postpone revenue.
While LLY has outperformed NVO in 2025, the rivalry remains fierce.
Analyst Ratings and Price Targets
Analysts remain cautiously optimistic:
- Consensus Rating: "Moderate Buy" with an average price target of $1,012 (20% upside from April 2025 levels).
- Bullish View: Citigroup sees $1,190, citing LLY’s leadership in diabetes and oncology.
- Cautious Take: Morgan Stanley trimmed its target to $1,124, citing valuation concerns.
Conclusion: A Buy with Caution
Eli Lilly’s stock is a buy for long-term investors, but risks demand attention:
- Upside Drivers:
- Orforglipron’s FDA approval (expected late 2025) could supercharge growth.
- 2025 revenue guidance of $58–61 billion implies 32% growth, fueled by Mounjaro, Zepbound, and oncology drugs.
- R&D pipeline: Genetic medicines and oncology therapies position LLY for future markets.
- Downside Risks:
- High valuations (P/E of 71.88, vs. S&P 500’s 22) may limit short-term gains.
- Regulatory headwinds and pricing pressures could cap margins.
Final Take: With $11.8 billion in projected orforglipron sales by 2030 and a diversified pipeline, Eli Lilly’s long-term prospects are strong. However, investors should monitor Q2 2025 updates on supply chain improvements and competitive dynamics. For those willing to weather volatility, LLY offers a compelling growth story in a high-demand therapeutic space.
The data tells a story of sustained momentum—provided the company navigates its challenges.
