LLY · Eli Lilly
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $1,250
Note written ·
In the portfolio Since : +0.4% from the average price paid for its shares, 0.1 percentage points behind the S&P 500 from the minute it was bought. See the portfolio.
Why it was bought
Bought 10 November 2026, in the portfolio's opening purchases. The fact behind it, dated 29 October 2026: Q3 2026 results: revenue +39% to $24.4 billion, volume +53%, 2026 guide raised to $91–92 billion from $85–87 billion.
Price against the kill line
15.5% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $1,250.00, on record since 11 November 2026. The shares are up 22.2% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $1,250, under the $1,288.30 close of 28 October 2026 before the third-quarter report, which would erase the full post-earnings gain. A cut to the $91.0–92.0 billion 2026 revenue guidance, or 2027 revenue guidance implying growth below about 15%, would also break the case.
The portfolio's case
Tirzepatide volume is outrunning price cuts: Q3 2026 volume rose 53% against realized prices down 15%, and revenue rose 39% to $24.4 billion. Foundayo, at $184 million in its second quarter, has since won China's first oral weight-loss approval. At about 28 times estimated 2027 earnings of roughly $50 a share (10 November 2026), a second franchise in the pill is not priced.
The portfolio sells if one of these comes true
- 2027 revenue guidance, expected with the Q4 report around early February 2027, implies growth below about 15% on the 2026 guide of $91–92 billion (Q3 2026 growth: 39%).
- US Zepbound or Mounjaro revenue falls quarter over quarter in Q1 2027, or Lilly's US share of new patient starts drops after Novo Nordisk's $675 list prices take effect on 1 January 2027.
- Foundayo quarterly sales below about $300 million in Q1 2027 (Q3 2026: $184 million), a retatrutide approval filing slipping beyond Q1 2027, or a safety signal for either drug.
It can also sell when that day's research finds the stock fully priced, for a clearly better use of the money, to limit risk in the portfolio, on the weekly review's plan, when a cash takeover pays the shares out or at the end set for a shorter trade when it was bought. A close through the kill line (on a weekly line, a weekly close) means the note's call is wrong: the note is re-read, and the portfolio reads the new note at its next decision. The price alone never sells.
What the portfolio did, and why
- · Added to LLY on company news. The fact behind it, dated 12 November 2026: China's National Medical Products Administration approved Foundayo (orforglipron) for weight management, the first oral GLP-1 weight-loss drug cleared in China, reported 12 November 2026.
Catalyst
The business · as of
Eli Lilly discovers, makes and sells prescription medicines, led by tirzepatide (Mounjaro for diabetes, Zepbound for obesity), plus cancer, immunology and neuroscience drugs. It sells mainly through wholesalers and pharmacies, paid by insurers, governments and patients. Revenue was $24,397 million in the quarter to 30 September 2026.
What is changing, and what follows · as of
- What is changing now
- On 29 October 2026 Lilly reported third-quarter revenue up 39% to $24.4 billion on 53% volume growth and raised 2026 revenue guidance to $91.0–92.0 billion; China approved its Foundayo pill, reported 12 November 2026.
- What follows for the company
- Lilly is spending heavily on supply: $10,984 million of capital spending in four quarters to 30 September 2026 and a $3.5 billion Pennsylvania plant begun 12 November 2026, while the operating margin fell to 35.3% from 45.0%.
- What follows for its customers, suppliers and competitors
- Novo Nordisk (NVO) trails in China's oral market and cuts US list prices on 1 January 2027; Hims & Hers (HIMS) sells Zepbound and Foundayo from 6 November 2026; Pfizer (PFE) is funding a rival monthly GLP-1.
What the price assumes · as of
At the 13 November 2026 close (filed inputs to 29 October 2026) the shares trade at 49.2 times earnings, 16.2 times sales and 40.2 times EV/EBIT, with a 1.4% free-cash-flow yield; that holds only if revenue keeps growing near the 38.6% of the quarter to 30 September 2026 while the operating margin, down to 35.3% from 45.0% in the March quarter, stops falling.
Key figures from the filings · Health Care
Quarter to 30 September 2026, filed 29 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 24,397
- Revenue, change on a year (%)
- +38.6
- Gross margin (%)
- 83.9
- Operating margin (%)
- 35.3
- Free cash flow, four quarters ($M)
- 19,661
- Net cash, cash less debt ($M)
- −44,618
- Price to earnings (×)
- 49.2
- Enterprise value to sales (×)
- 16.2
All filed numbers
What Eli Lilly reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 24,397 | +38.6 | 83.9 | 35.3 |
| first filed | 22,974 | +47.7 | 85.8 | 39.1 |
| first filed | 19,799 | +55.5 | 81.9 | 45.0 |
| first filed | 19,292 | +42.6 | 82.5 | 43.4 |
| first filed restated | 17,601 | +53.9 | 82.9 | 41.8 |
| first filed | 15,558 | +37.6 | 84.3 | 44.1 |
| Pre-tax income ($M) | 8,406 |
| Net income ($M) four quarters: 27,580 | 6,451 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −0.6 |
| Operating cash flow ($M) | 30,645 |
| Capital spending ($M) | 10,984 |
| Free cash flow ($M) | 19,661 |
| Cash and short-term investments ($M) | 4,885 |
| Debt ($M) non-current long-term debt plus current debt | 49,503 |
| Net cash, cash less debt ($M) | −44,618 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 22,089 |
| Inventory ($M) | 18,194 |
| Shareholders' equity ($M) | 40,271 |
| Market value ($M) | 1,357,966 |
| Enterprise value, market value plus net debt ($M) | 1,402,584 |
| Enterprise value to sales (×) | 16.2 |
| Enterprise value to operating income (×) | 40.2 |
| Price to earnings (×) | 49.2 |
| Price to book value (×) | 33.7 |
| Free-cash-flow yield (%) | 1.4 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 0.7% of shares outstanding sold short, 3.0 days of average trading to cover, −1.1% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $7.0M |
| 12 monthsfrom | $0 | $1.1B |
Linked companies · as of
- Competitors:
- NVO, PFE
The thesis
Eli Lilly's shares are more likely than not to beat the S&P 500 over the next three months, because tirzepatide volume is still growing faster than its prices are falling and the pipeline behind it keeps producing results. The fourth-quarter report and first 2027 outlook, expected around 4 February 2027, settle the case. That report will be the first to show demand after Novo Nordisk's US list-price cuts take effect on 1 January 2027.
The rating is Medium. Three things support the case: third-quarter revenue up 39%, 2026 revenue guidance raised to $91.0–92.0 billion on 29 October 2026, and two Foundayo wins in one week, a sleep-apnea trial (9 November 2026) and China's first approval of an oral weight-loss drug (reported 12 November 2026). Four things hold the rating below High: deeper price cuts, a falling operating margin, new safety wording on GLP-1 labels and a valuation that leaves little room for a miss.
The price already pays for strong growth. At the 13 November 2026 close, using filed figures to 29 October 2026, the shares trade at 49.2 times earnings and 16.2 times sales. They closed at $1,443.50 on 13 November 2026, 1.1% below the 52-week intraday high of $1,460.00 set on 12 November 2026.
Bullish and bearish views on Eli Lilly and Company
The bull case on Eli Lilly and Company (LLY), in brief: volume is still outrunning price. The bear case: price cuts are getting deeper.
Bull case
- Volume is still outrunning price. Third-quarter revenue rose 39% to $24.4 billion. Volume rose 53% while realized prices fell 15% (Lilly Form 8-K, 29 October 2026).
- Both tirzepatide brands grew fast. Mounjaro sales rose 65% to $10.7 billion and Zepbound sales rose 49% to $5.35 billion in the third quarter (Form 8-K, 29 October 2026).
- Revenue guidance went up again. On 29 October 2026 Lilly raised 2026 revenue guidance to $91.0–92.0 billion from $85.0–87.0 billion, and raised its performance-margin guidance to 52.0–52.5% from 49.0–50.5%.
- Foundayo is first in China. China's National Medical Products Administration cleared Foundayo (orforglipron) for weight management, reported 12 November 2026, while Novo's oral Wegovy is still under review there (Pharmaceutical Technology). Benzinga put the Chinese market at a potential $4.5 billion on the same day.
- Foundayo cleared a sleep-apnea trial. In patients not using a breathing machine, Foundayo cut breathing interruptions by 43.8%, or 21.1 events an hour, against 4.3 events on placebo (Lilly release, 9 November 2026). Lilly plans an FDA filing by the end of 2026.
- Retatrutide added a second use. Two Phase 3 trials, TRIUMPH-4 and TRIUMPH-1-OA, were published in the New England Journal of Medicine on 8 November 2026. In a pooled analysis about two-thirds of patients on retatrutide halved their knee-osteoarthritis pain, against 38% on placebo (News-Medical, 8 November 2026).
- Supply keeps expanding. Lilly broke ground on a $3.5 billion plant in Pennsylvania's Lehigh Valley on 12 November 2026, part of a $50 billion US manufacturing expansion (Benzinga). Capital spending reached $10,984 million over the four quarters to 30 September 2026 (10-Q).
- The top target rose after the report. Jefferies raised its target to $1,700 from $1,610 on 9 November 2026, the highest on Wall Street, citing obesity markets outside the US (Finviz/Benzinga).
Bear case
- Price cuts are getting deeper. US realized prices fell 7% and prices outside the US fell 29% in the third quarter (Form 8-K, 29 October 2026). The US decline in the second quarter was 3%.
- Operating margin has fallen three quarters running. The filed operating margin was 45.0% in the March quarter, 39.1% in the June quarter and 35.3% in the September quarter (10-Q, 29 October 2026). Lilly also cut 2026 non-GAAP earnings-per-share guidance to $35.00–36.00 from $35.50–36.50 on 29 October 2026, as charges for research acquired in deals outweighed the underlying gain.
- Novo's pill leads the US oral market. Novo's Wegovy pill sold DKK 5,394 million in the third quarter, and Novo said the Wegovy franchise holds more than 50% of new US branded obesity starts (Form 6-K, 4 November 2026). Foundayo sold $184 million worldwide in the same quarter.
- Safety wording keeps accumulating. The FDA's 9 November 2026 safety communication added NAION (nonarteritic anterior ischemic optic neuropathy), a rare optic-nerve condition, to the warnings of every GLP-1 drug. On 13 November 2026 the European Medicines Agency's drug committee advised Mounjaro patients on oral contraceptives to use an added method of contraception (company news).
- Medicare pricing risk is near. Trulicity and Verzenio are in the third Medicare negotiation cycle, whose final prices are due by 30 November 2026 and take effect on 1 January 2028 (CMS). Benzinga reported on 11 November 2026 that Lilly's Medicare exposure is more immediate than Merck's or Bristol Myers'.
- Rivals are funding new drugs. Pfizer said on 11 November 2026 that Blackstone Life Sciences will pay up to $1.5 billion of development costs for its monthly GLP-1 drug berobenatide (Benzinga). Novo's US list prices for Wegovy, Ozempic and Rybelsus fall to $675 a month on 1 January 2027.
- Debt is high against cash. Debt stood at $49,503 million against $4,885 million of cash and short-term investments at 30 September 2026 (10-Q).
- Insiders sold, none bought. General Counsel Anat Hakim sold 5,000 shares at $1,402.52 on 2 November 2026 under a Rule 10b5-1 plan (SEC Form 4). Other Form 4 filings since the report show gifts, including 23,538 shares by Chief Executive David Ricks on 3 November 2026, and tax withholding; none shows an open-market purchase.
Price setup
The shares closed at $1,443.50 on 13 November 2026, 1.1% below the 52-week intraday high of $1,460.00 reached on 12 November 2026. That session reversed. The shares traded up on the China approval but closed at $1,427.28, below the $1,437.29 close of 11 November 2026.
The run since the third-quarter report is steady. The session before the report closed at $1,288.30 on 28 October 2026. The shares closed at $1,354.00 on 6 November 2026 and $1,411.95 on 9 November 2026, after the sleep-apnea data and the Jefferies target, and every close since the report has stayed above the pre-report level.
The 50-day moving average stands at $1,239.61 and the 200-day at $1,106.28 as of 13 November 2026, both well below the price. The shares are up 22.2% over three months on adjusted closes, and the 52-week closing low was $851.21 on 29 April 2026. A fall back to the pre-report close would still leave the shares above both averages. Jefferies' $1,700 target sits above the last close.
Catalysts ahead
- ~30 November 2026 (est.): CMS publishes negotiated Medicare prices for the third negotiation cycle, which includes Trulicity and Verzenio. It shows the size of the 2028 price cut on two established Lilly drugs and tests the older portfolio apart from tirzepatide.
- ~15 December 2026 (est.): European Commission decision on Foundayo (orforglipron) after the 15 October 2026 positive EMA committee opinion. Approval adds Europe to the US and China for Lilly's oral GLP-1, whose third-quarter sales of $184 million trail Novo's Wegovy pill.
- ~31 December 2026 (est.): FDA filing for Foundayo in obstructive sleep apnea, guided for the end of 2026. A filing on schedule adds a second use for the pill and sets it apart from Novo's Wegovy pill.
- 1 January 2027: Novo Nordisk US list-price cuts for Wegovy, Ozempic and Rybelsus to $675 a month take effect. It tests whether Zepbound keeps insurance coverage and prescription share when its main rival's list price falls.
- ~4 February 2027 (est.): Fourth-quarter 2026 results and first 2027 guidance. It shows whether tirzepatide volume growth still outruns falling prices and whether the operating margin stops falling, and it sets the path for 2027 revenue.
- ~31 March 2027 (est.): Planned US filing for retatrutide approval, guided for the first quarter of 2027. A filing on schedule extends the obesity franchise beyond tirzepatide; a delay would weaken it.
What would change the view
A daily close below $1,250, under the $1,288.30 close of 28 October 2026 before the third-quarter report, which would erase the full post-earnings gain. A cut to the $91.0–92.0 billion 2026 revenue guidance, or 2027 revenue guidance implying growth below about 15%, would also break the case.
The risks this note tracks, each with what would confirm it:
- Price cuts in the US and abroad outrun volume growth, so tirzepatide revenue growth slows. Confirmed by: US realized prices falling by more than the 7% decline of the third quarter of 2026, with Mounjaro and Zepbound growth slowing sharply in the fourth-quarter report.
- Novo Nordisk's 1 January 2027 list-price cuts move insurers and prescribers toward Wegovy. Confirmed by: US Zepbound or Mounjaro revenue falling from the previous quarter in the first quarter of 2027, or Lilly's US share of new patient starts dropping after Novo's $675 list prices take effect on 1 January 2027.
- Spending on plants, launches and acquired research keeps pushing the operating margin down. Confirmed by: a fourth-quarter 2026 operating margin below the 35.3% of the third quarter, or 2027 guidance that does not restore margin growth.
- The NAION warning for all GLP-1 drugs slows new prescriptions or feeds product-liability litigation. Confirmed by: FDA moving beyond the 9 November 2026 warning to label restrictions, a drop in weekly new prescriptions, or Lilly disclosing a litigation reserve.
- Medicare negotiation cuts Trulicity and Verzenio prices more than expected from 2028. Confirmed by: CMS negotiated prices published by 30 November 2026 showing deep discounts to list price on either drug.
- Novo's Wegovy pill keeps its lead and Foundayo's launch stays slow despite the China approval. Confirmed by: Foundayo quarterly sales below about $300 million in the first quarter of 2027, after $184 million in the third quarter of 2026, or a safety signal for the drug.
- The retatrutide filing slips, leaving the obesity franchise reliant on tirzepatide for longer. Confirmed by: Lilly moving the retatrutide US filing beyond the first quarter of 2027, or a safety signal emerging in its Phase 3 data.
What it trades with
The case shares its drivers with Novo Nordisk (NVO): US list prices, insurer coverage of obesity drugs, and the race in oral GLP-1 pills. The 1 January 2027 Novo price cuts and Novo's next report bear directly on Lilly's US share of new patients.
Drug-pricing policy moves Lilly with other large drugmakers. Benzinga's 11 November 2026 report grouped Lilly with Gilead, Merck and Bristol Myers on Medicare pricing exposure, so a Washington pricing headline tends to hit the group together.
Lilly is one of the largest companies in the S&P 500, with a market value of $1,357,965 million at the 13 November 2026 close. Its own moves therefore carry weight in the index it is measured against. That narrows the gap any single result can open between the shares and the index.
Caveats
- Eli Lilly's results depend heavily on one molecule, tirzepatide, sold as Mounjaro for diabetes and Zepbound for obesity; the two brands sold about $16 billion of $24.4 billion third-quarter 2026 revenue. Lilly third-quarter 2026 earnings release, Form 8-K · as of
- Eli Lilly regularly books charges for research acquired when it buys or licenses drugs, which can sharply change reported and non-GAAP earnings per share from one quarter to the next. Lilly third-quarter 2026 earnings release, Form 8-K · as of
- Since an FDA order dated 9 November 2026, all GLP-1 drugs, including Mounjaro, Zepbound and Foundayo, carry a warning about the rare eye condition NAION. FDA Drug Safety Communication, 9 November 2026 · as of
The evidence, claim by claim (8)
- Third-quarter 2026 revenue rose 39% to $24.4 billion; volume rose 53% and realized prices fell 15%, with US prices down 7% and prices outside the US down 29%. Lilly third-quarter 2026 earnings release, Form 8-K · as of
- Lilly raised 2026 revenue guidance to $91.0–92.0 billion from $85.0–87.0 billion and cut non-GAAP earnings-per-share guidance to $35.00–36.00 from $35.50–36.50. Lilly third-quarter 2026 earnings release, Form 8-K · as of
- China's National Medical Products Administration approved Foundayo (orforglipron) for weight management, the first oral GLP-1 weight-loss drug cleared in China; Novo's oral Wegovy is still under review there. Pharmaceutical Technology, 12 November 2026 · as of
- Foundayo met its primary endpoint in ATTAIN-OSA, cutting the apnea-hypopnea index by 43.8% in patients not using PAP and by 27.5% in PAP users; Lilly plans an FDA filing by the end of 2026. Lilly press release · as of
- Retatrutide's Phase 3 TRIUMPH-4 and TRIUMPH-1-OA trials in knee osteoarthritis were published; in a pooled analysis about two-thirds of retatrutide patients cut knee pain by at least 50%, against 38% on placebo. New England Journal of Medicine, reported by News-Medical · as of
- FDA required a NAION warning on all GLP-1 drug labels; its trial meta-analysis found 6.4 vs 3.8 probable cases per 100,000 person-years. FDA Drug Safety Communication · as of
- Novo's Wegovy pill sold DKK 5,394 million in the third quarter of 2026, and the Wegovy franchise holds more than 50% of new US branded obesity patient starts. Novo Nordisk third-quarter 2026 report, Form 6-K · as of
- Jefferies raised its Eli Lilly price target to $1,700 from $1,610, the highest on Wall Street, citing obesity markets outside the US. Finviz/Benzinga, 9 November 2026 · as of
Sources
- ELI LILLY & Co - Form 8-K - FY2026 · sec.gov
- Eli Lilly beats Novo to oral China GLP-1RA market on NMPA approval · pharmaceutical-technology.com ·
- Lilly's Foundayo (orforglipron) significantly reduced obstructive sleep apnea severity, reinforcing its potential to improve health beyond weight loss · investor.lilly.com
- Retatrutide reduces knee pain and body weight in osteoarthritis patients · news-medical.net ·
- FDA Requires Safety Labeling Changes for Glucagon-Like Peptide-1 Receptor Agonists (GLP-1 RAs) Due to Potential Increased Risk of Rare But Serious Eye Condition · fda.gov ·
- NOVO NORDISK A S - Form 6-K - FY2026 · sec.gov ·
- Finviz
- Lilly, Gilead Face Near-Term Drug Pricing Risks: EXCLUSIVE · benzinga.com
Related · shared themes
AMGN
Amgen
Amgen is modestly more likely than not to beat the S&P 500 over three months because Repatha, Evenity and newer drugs are outgrowing…
HIMS
Hims & Hers Health
Hims & Hers Health shares are more likely to lag the S&P 500 after a 9 November 2026 report showing 57% gross margin and a flat…
VKTX
Viking Therapeutics
Viking Therapeutics is more likely to lag the S&P 500 over three months: $960 million in cash funds its obesity Phase 3 trials, but no…
BMEA
Biomea Fusion
Biomea Fusion is more likely to lag the S&P 500 over three months: cash fell to $26.8 million at 30 September 2026 and BMF-650 has no…