Obesity drugs, pipeline investment, and manufacturing capacity are reshaping the pharmaceutical industry’s growth equation. Analysts expect the weight-loss sector to generate about $100 billion in annual sales over the next decade.
Meanwhile, for Eli Lilly and Company (NYSE:LLY) and AbbVie Inc. (NYSE:ABBV), the valuation question ultimately comes down to earnings: how quickly can EPS grow, and how long can that growth last?
That distinction is particularly important for Lilly, whose premium valuation depends on earnings continuing to catch up with its share price.
That broader investor interest is also reflected in our recent list of the 10 Best Healthcare Stocks to Buy According to Hedge Funds, where AbbVie Inc. ranked 7th and Eli Lilly and Company also made the list.
Lilly’s Valuation Depends on How Long Earnings Can Keep Compounding
At $1,157.08 on October 1, Eli Lilly and Company shares were up 51.65% over the prior 52 weeks, as surging demand for Mounjaro and Zepbound, repeated guidance increases, and progress across its next generation of obesity drugs strengthened expectations for continued earnings growth.
Seeking Alpha consensus estimates put the stock at 30.93 times 2026 earnings, 24.01 times 2027 earnings, and 21.02 times 2028 earnings. Consensus EPS growth is expected to reach 52.62% in 2026 and 28.80% in 2027 before slowing to 14.24% in 2028.
That progression gets directly at the valuation question.
Lilly’s earnings growth is expected to remain unusually strong through 2027, allowing the P/E multiple to fall quickly even if the share price does not change. But the expected slowdown to 14.24% in 2028 means maintaining the premium increasingly depends on extending that earnings runway.
For now, Mounjaro and Zepbound are doing much of the work.
Second-quarter revenue jumped 48% to $23 billion, primarily on higher volume from the two drugs. JPMorgan reinforced that earnings argument on September 28, raising its price target to $1,500 from $1,400 and maintaining an Overweight rating, citing strong incretin trends, international obesity growth and initial Zepbound uptake in Medicare.
Lilly’s Pipeline Has to Extend the Earnings Runway
The question is what sustains earnings growth as the existing incretin franchise becomes larger. Lilly’s answer is a broader obesity portfolio.
On September 30, Phase 2 EloraTZP produced 23.3% average weight loss at the highest tested dose after 48 weeks, versus 14.8% for tirzepatide 15 mg, with Phase 3 studies planned by year-end. Foundayo adds an oral option, while Lilly plans to submit retatrutide for U.S. approval in the first quarter of 2027.
Those assets matter because they could extend growth beyond the current Mounjaro and Zepbound ramp.
Manufacturing capacity is part of the same equation. Eli Lilly and Company has committed more than $21 billion to four new U.S. manufacturing plants, including a $3.5 billion Pennsylvania facility announced in January 2026.
The valuation test is whether that investment and the next generation of obesity drugs can keep earnings growing after the currently expected deceleration.
AbbVie’s Earnings Bar Is Lower
AbbVie Inc. presents a less demanding earnings profile.
At $261.59 on October 1, shares were up 12.98% over the prior year, supported by strong growth from Skyrizi and Rinvoq, continued expansion in neuroscience, and improving earnings expectations despite the ongoing decline in Humira. Seeking Alpha consensus estimates put AbbVie at 18.76 times 2026 earnings, falling to 16.16 times in 2027 and 14.59 times in 2028. EPS is expected to grow 40.07% in 2026, 16.07% in 2027, and 10.76% in 2028.
At the current share price, AbbVie Inc. therefore requires considerably less earnings growth than Lilly for its forward multiple to fall into the mid-teens. Its valuation instead depends on whether the company can sustain double-digit earnings growth as Skyrizi and Rinvoq replace the economics lost through Humira’s decline.
That transition is already visible.
In the second quarter, Skyrizi revenue reached $5.51 billion and Rinvoq generated $2.53 billion, helping AbbVie’s immunology portfolio grow 15.1%, while neuroscience revenue increased 20.3%.
AbbVie Is Investing to Extend Growth Beyond Its Core Franchises
The longer-term question is what follows those products.
AbbVie Inc. completed its approximately $10.9 billion acquisition of Apogee Therapeutics on September 3, adding zumilokibart and APG273. The transaction is expected to dilute adjusted EPS by $0.14 in 2026 and approximately $0.46 in 2027, with accretion beginning in 2032. AbbVie nevertheless reaffirmed 2026 adjusted EPS guidance of $13.87 to $14.07.
Zumilokibart subsequently met the primary endpoint across all three regimens in Phase 2 APEX Part B, while early ABBV-295 data gives AbbVie another route into obesity. BofA maintained Buy and raised its target to $282 from $276 after incorporating zumilokibart into its estimates.
Hedge Funds Increased Exposure to Both
Second-quarter 2026 13F filings show Eli Lilly and Company hedge fund ownership rising to 152 funds from 132, with holdings increasing to $17.24 billion from $12.58 billion. AbbVie’s count edged up to 88 from 87, but holdings roughly doubled to $8.56 billion from $4.25 billion, with several large holders increasing positions. The filings remain backward-looking quarter-end snapshots.
The Valuation Difference Ultimately Comes Down to Earnings Duration
The valuation gap ultimately comes down to how long each company can sustain its expected earnings growth.
Lilly’s P/E falls from 30.93 times in 2026 to 21.02 times by 2028 as consensus expects rapid earnings expansion, but EPS growth is also expected to slow sharply by then.
AbbVie’s multiple falls from 18.76 times to 14.59 times over the same period on a slower earnings trajectory.
For Lilly, the key is extending growth beyond the current obesity-drug ramp; for AbbVie Inc., it is sustaining Skyrizi and Rinvoq while turning newer pipeline assets into the next source of earnings.
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