Should You Buy Eli Lilly Stock At $820?

April 17th, 2025 by Trefis Team

Eli Lilly stock (NYSE: LLY) stock is showing positive momentum on Thursday, April 17th, following the company’s announcement of successful results from the first of its late-stage trials for a daily obesity pill. The trial met its primary goals, demonstrating the pill’s effectiveness in helping patients with Type 2 diabetes achieve lower blood sugar levels and reduced body weight. Notably, the pill also exhibited a safety profile comparable to popular injectable medications currently on the market, such as Novo Nordisk’s Ozempic.

This development is a significant positive for Eli Lilly. The convenience of a daily pill, as opposed to an injection like Ozempic, could offer a considerable advantage if the treatment receives regulatory approval, potentially giving it an edge over its rival Novo Nordisk.

Given this positive news and the subsequent stock rise, the question is whether Eli Lilly is a buy at around $820. Our analysis suggests it is. We have reached this conclusion by comparing Eli Lilly’s current valuation with its recent operating performance, as well as its present and historical financial condition. Our assessment, which considers key factors such as Growth, Profitability, Financial Stability, and Downturn Resilience, indicates that Eli Lilly possesses a very strong operating performance and robust financial condition, as will be elaborated upon below.

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How Does Eli Lilly’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, LLY stock looks very expensive compared to the broader market.

  • Eli Lilly and has a price-to-sales (P/S) ratio of 16.6 vs. a figure of 2.8 for the S&P 500
  • It trades at a price-to-earnings (P/E) ratio of 70 vs. a figure of 22 for the benchmark S&P 500

 

How Have Eli Lilly’s Revenues Grown Over Recent Years?

Eli Lilly’s Revenues have grown considerably over recent years.

  • Eli Lilly has seen its top line grow at an average rate of 17.4% over the last 3 years (vs. increase of 6.2% for S&P 500)
  • Its revenues have grown 32.0% from $34 Bil to $45 Bil in the last 12 months (vs. growth of 5.3% for S&P 500)
  • Also, its quarterly revenues grew 44.7% to $14 Bil in the most recent quarter from $9.4 Bil a year ago (vs. 4.9% improvement for S&P 500)

How Profitable Is Eli Lilly?

Eli Lilly’s profit margins are much higher than most companies in the Trefis coverage universe.

  • Eli Lilly’s Operating Income over the last four quarters was $18 Bil, which represents a considerably high Operating Margin of 38.9% (vs. 13.1% for S&P 500)

 

Does Eli Lilly Look Financially Stable?

Eli Lilly’s balance sheet looks strong.

  • Eli Lilly’s Debt figure was $34 Bil at the end of the most recent quarter, while its market capitalization is $661 Bil (as of 4/16/2025). This implies a very strong Debt-to-Equity Ratio of 4.9% (vs. 21.5% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
  • Cash (including cash equivalents) makes up $3.4 Bil of the $79 Bil in Total Assets for Eli Lilly.  This yields a poor Cash-to-Assets Ratio of 4.3% (vs. 15.0% for S&P 500)

 

How Resilient Is LLY Stock During A Downturn?

LLY stock has been more resilient than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on LLY stock? Our dashboard How Low Can Eli Lilly and Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.

Inflation Shock (2022)

  • LLY stock fell 15.0% from a high of $276.22 on 1 January 2022 to $234.69 on 14 February 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
  • The stock fully recovered to its pre-Crisis peak by 16 March 2022
  • Since then, the stock has increased to a high of $960.02 on 2 September 2024 and currently trades at around $730

 

Covid Pandemic (2020)

  • LLY stock fell 19.2% from a high of $147.35 on 5 February 2020 to $119.05 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
  • The stock fully recovered to its pre-Crisis peak by 14 April 2020

 

Global Financial Crisis (2008)

  • LLY stock fell 54.6% from a high of $60.56 on 20 April 2007 to $27.47 on 5 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
  • The stock fully recovered to its pre-Crisis peak by 21 April 2014

 

Putting All The Pieces Together: What It Means For LLY Stock

In summary, Eli Lilly and’s performance across the parameters detailed above are as follows:

  • Growth: Extremely Strong
  • Profitability: Very Strong
  • Financial Stability: Strong
  • Downturn Resilience: Strong
  • Overall: Very Strong

Eli Lilly has demonstrated very strong performance across key metrics. While its valuation multiple may appear elevated, this seems justified by the company’s robust growth prospects and promising drug pipeline. With the demand for obesity treatments rapidly increasing, Eli Lilly has emerged as a leading player alongside Novo Nordisk. Furthermore, the potential approval of Eli Lilly’s convenient daily pill for Type 2 diabetes could give it a significant advantage in the expanding diabetes and obesity drug market. Overall, even after the stock’s rally today, we maintain our view that LLY stock is a strong buy. Notably, the average analyst price target of $1008 still suggests an upside of over 20% from the current levels.

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