How to Play Lilly Stock Post Oral Obesity Pill Foundayo's Approval

Eli Lilly and Company LLY, last week, gained the much-anticipated FDA approval for its once-daily oral GLP-1 pill orforglipron for treating obesity. The pill will be marketed under the name Foundayo. The company expects Foundayo shipments to begin this week, with the drug expected to soon become widely available across U.S. retail pharmacies and telehealth platforms.

Foundayo’s approval was based on data from the phase III ATTAIN clinical program, which showed that the pill delivered an average of 12.4% weight loss at the highest dose.

Oral pills will be a more convenient alternative to the once-weekly injectable GLP-1 obesity treatments like Lilly’s Zepbound and rival Novo Nordisk NVO Wegovy. Oral pills may significantly lower treatment burden and potentially broaden patient adoption versus injections. They can also be manufactured at scale to meet global demand, which, in turn, can drive billions in additional sales.

NovoNordisk had gained approval for an oral version of its obesity drug, Wegovy, in December 2025 and launched the pill in January 2026. The Wegovy pill gave NVO a first-to-market advantage and will initially bring in additional revenues. However, we believe Lilly may be able to close the gap quickly now that the FDA has approved Foundayo. Also, Foundayo offers better patient convenience as it can be taken at any time of day, with or without food. In contrast, NVO’s Wegovy pill has to be taken on an empty stomach, followed by a waiting period of 30 minutes before eating. However, in terms of side effects, Wegovy has a slight edge as it seems to have a more stable safety and tolerability profile than Foundayo, whose use is associated with some gastrointestinal side effects.

Overall, Foundayo’s approval was a huge win for Lilly’s, as evidenced by the stock’s 6.5% rise last week. However, a single positive news is not so important for long-term investors to make an investment decision. Let’s understand the company’s strengths and weaknesses to better analyze how to play LLY’s stock in this scenario.

Strong Growth of LLY’s GLP-1 Drugs Mounjaro and Zepbound

Lilly boasts a robust portfolio of treatments for diabetes and other cardiometabolic conditions, with its cardiometabolic division emerging as the company’s strongest segment. This success is largely attributed to strong sales of Mounjaro and Zepbound. Despite being on the market for slightly more than three years, Mounjaro and Zepbound have become key top-line drivers for Lilly, with demand rising rapidly. These therapies account for more than 50% of the company’s total revenues.

Mounjaro is the market leader in new prescriptions within type II diabetes incretin analogs in both the United States and ex-U.S. markets, while Zepbound also holds a leading market share in the branded obesity market with nearly 70% share of new prescriptions.

In 2025, the drugs generated combined sales of $36.5 billion, comprising around 56% of the company’s total revenues. Robust growth trends in the U.S. incretin analogs market and positive uptake trends of Mounjaro and Zepbound in new international markets led to strong sales growth in 2025, with the trend expected to continue in 2026.

New Drugs Also Contributing to LLY’s Growth

In addition to Mounjaro and Zepbound, Lilly has secured approvals for several other new therapies over the past few years. These include Omvoh for treating ulcerative colitis and Crohn’s disease, BTK inhibitor Jaypirca for mantle cell lymphoma and chronic lymphocytic leukemia, Ebglyss for moderate-to-severe atopic dermatitis and Kisunla (donanemab) for early symptomatic Alzheimer’s disease. These newly approved drugs are also contributing to Lilly’s revenue growth.

Lilly’s Broad Obesity Pipeline

Lilly is developing several next-generation, more powerful and more convenient GLP-1–based treatments, including oral options and multi-acting candidates.

Foundayo can prove to be a commercial game-changer for Lilly with the potential to bring in $1 billion-$2 billion in sales as early as in 2026. In international markets, Lilly expects to launch orforglipron for obesity during 2027. For the type II diabetes indication, Lilly has filed a regulatory application in the EU and plans to file regulatory applications in the United States and other countries later in 2026.

Lilly is also evaluating orforglipron in late-stage studies in other disease areas like obstructive sleep apnea, osteoarthritis pain of the knee, stress urinary incontinence and hypertension. These multiple late-stage studies on orforglipron can expand the candidate’s revenue potential beyond obesity/type II diabetes

The company is evaluating another key candidate, triple-acting incretin, retatrutide in type II diabetes and obesity, along with other indications like obstructive sleep apnea, knee osteoarthritis, and chronic low back pain, in late-stage studies. Retatrutide represents a new generation of “triple-action” therapy as it targets three biological pathways — GLP-1, GIP and glucagon — whereas existing medicines mostly act on one or two biological pathways.

Data from a phase III study on retatrutide in obesity and knee osteoarthritis pain showed that the drug delivered significant weight loss with substantial relief from osteoarthritis pain. Lilly expects data readouts from additional phase III studies on retatrutide for treating obesity in 2026. It plans to seek approval for retatrutide for obesity and knee osteoarthritis pain in 2026.

Efforts to Diversify Beyond Obesity & Diabetes

In the past couple of years, Lilly has upped its efforts to diversify beyond GLP-1 drugs by expanding into cardiovascular, oncology and neuroscience areas. In 2025, it announced several M&A deals. It acquired Verve Therapeutics to add gene therapies for heart disease to its pipeline. Lilly also acquired Scorpion Therapeutics’ oncology drug and SiteOne Therapeutics’ non-opioid pain candidate. The acquisition of Adverum Biotechnologies in December 2025 added its lead candidate, Ixo-vec, an intravitreal single-administration gene therapy being developed in phase III to treat vision loss associated with wet age-related macular degeneration.

In January 2026, Lilly announced a definitive agreement to buy Ventyx Biosciences to deepen its exposure in oral small-molecule therapies targeting inflammatory-mediated diseases. In February, it announced a deal to acquire private biotech Orna Therapeutics, which is making in vivo CAR-T therapies to treat a wide range of B-cell-driven autoimmune diseases. Last week, Lilly announced a deal to acquire Centessa Pharmaceuticals to expand its presence in sleep disorder therapies and the broader neuroscience space.

Race to Make Oral Obesity Pill Intensifies

The global obesity drug market is projected to grow dramatically, reaching nearly $95 billion by 2030 and potentially $125 billion by 2035, according to Goldman Sachs estimates. While Lilly and Novo Nordisk currently dominate this space, smaller biotechs like Structure Therapeutics GPCR and Viking Therapeutics VKTX are also developing oral GLP-1 drugs for treating obesity.

Viking Therapeutics’ dual GIPR/GLP-1 receptor agonist, VK2735, is being developed both as oral and subcutaneous formulations for the treatment of obesity. Viking plans to advance oral VK2735 into phase III development for obesity in the third quarter of 2026.

Structure Therapeutics’ phase II ACCESS study on its orally GLP-1 RA, aleniglipron, demonstrated significant weight loss across all doses. Structure Therapeutics expects to initiate the late-stage program of aleniglipron in obesity in the second half of 2026.

Novo Nordisk’s key novel candidate in its obesity pipeline is CagriSema, a once-weekly injection, which is a combination of cagrilintide (amylin analogue) and semaglutide (GLP-1). In phase III studies, this candidate has shown 22.7% weight loss. NVO has already filed a new drug application with the FDA seeking approval of CagriSema for obesity. Other key candidates are cagrilintide, a long-acting amylin analogue in phase III and amycretin, a single molecule combining GLP-1 + amylin, which is expected to enter phase III in 2026.

LLY’s Stock Price, Valuation and Estimates

Lilly’s stock has risen 10.9% in the past six months against the industry’s decrease of 0.3%.

LLY Stock Outperforms Industry

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From a valuation standpoint, Lilly’s stock is expensive. Going by the price/earnings ratio, LLY’s shares currently trade at 25.85 forward earnings, much higher than 20.30 for the industry. However, LLY’s stock is trading below its 5-year mean of 34.57.

LLY Stock Valuation

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The Zacks Consensus Estimate for 2026 has risen from $33.24 to $34.16 per share over the past 60 days, while that for 2027 has risen from $41.48 to $41.90 per share over the same timeframe.

LLY Estimate Movement

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Stay Invested in LLY Stock

Lilly has its share of problems. Prices of most of Lilly’s products are declining in the United States. Price is expected to continue to be a drag on top-line growth in the low to mid-teens percentage in 2026. Rising competition in the GLP-1 diabetes/obesity market is a key headwind. Also, sales of late-life cycle products like Trulicity, Taltz and Verzenio are expected to be flat to down in 2026.

However, exceptional growth from Mounjaro and Zepbound has made Lilly the largest drugmaker. It delivered robust financial performance in 2025 with revenues surging 45% and EPS growing 86%. Expectations for continued growth in 2026 remain high with projected revenues of $80-$83 billion and EPS of $33.50-$35.00.

Despite its expensive valuation, Lilly is a great stock to have in one’s portfolio, given its significant price appreciation, its product and pipeline portfolio in high-growth therapeutic areas like obesity, robust growth prospects and bullish analyst sentiment. Consistently rising estimates also reflect analysts’ optimistic outlook for the stock. Investors should stay invested in this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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