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. Eli Lilly and Company (NYSE:LLY) is already a major participant, while AbbVie Inc. (NYSE:ABBV) is broadening across immunology, neuroscience, and obesity.
That backdrop makes valuation the starting point. Based on available data as of October 1, 2026, Lilly trades at 13.26 times trailing sales versus 7.31 times for AbbVie. Johnson & Johnson, Amgen Inc. (NASDAQ:AMGN), and Merck & Co., Inc. trade at 6.69, 5.93, and 5.51 times, respectively.
Operating and pipeline differences explain the spread. 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 Premium Sits Alongside a Much Faster Growth Rate
For Eli Lilly and Company, the clearest distinction is growth.
Trailing revenue was $79.67 billion, up 49.6% year-over-year, while EBITDA rose 73.0% to $41.71 billion. Its 52.35% EBITDA margin compares with 47.78% for AbbVie, 45.33% for Amgen Inc., 43.37% for Merck & Co., Inc., and 35.61% for Johnson & Johnson.
That momentum has also reached the stock.
Eli Lilly and Company trades at 39.77 times trailing earnings with a 0.88 PEG ratio, versus 2.39 for AbbVie. At $1,157.08 on October 1, shares were up 51.65% over 52 weeks. JPMorgan on September 28 raised its target to $1,500 from $1,400 and kept an Overweight rating, citing incretin trends, international obesity growth, and initial Zepbound uptake in Medicare. The target implied 29.6% upside.
The Obesity Pipeline Is Moving Beyond Zepbound
The growth case is widening beyond Lilly’s existing obesity franchise.
On September 30, Phase 2 EloraTZP produced 23.3% average weight loss at the highest tested dose at 48 weeks, versus 14.8% for tirzepatide 15 mg, in adults with obesity or overweight and type 2 diabetes. Phase 3 studies are planned by year-end 2026.
Foundayo’s potential expansion into type 2 diabetes and investigational retatrutide extend Lilly’s growth runway.
Also on September 30, ACHIEVE-4 met its primary cardiovascular-safety objective by demonstrating Foundayo’s non-inferiority to insulin glargine for major adverse cardiovascular events, alongside A1C and weight reductions.
Eli Lilly and Company plans a U.S. retatrutide submission in Q1 2027 under the BLA pathway. That pipeline makes capacity the next valuation question.
Manufacturing Is Absorbing a Larger Share of Lilly’s Capital
That expansion is capital intensive.
Lilly’s $9.89 billion of trailing capital expenditures equaled 12.4% of revenue, versus $11.07 billion of levered free cash flow. Debt was $54.91 billion and debt-to-EBITDA 1.31 times.
That spending is visible in manufacturing.
Eli Lilly and Company has committed at least $27 billion to four U.S. plants, including a $3.5 billion Pennsylvania facility announced in January 2026, alongside Alabama, Virginia, and Texas sites.
Its forward dividend yield was 0.58%, keeping growth, pipeline execution, and manufacturing returns central to the valuation.
AbbVie Produces More Free Cash Flow at a Lower Sales Multiple
AbbVie Inc. presents the other side: slower growth but greater cash generation relative to its size.
Trailing revenue was $64.39 billion, up 10.4%, while EBITDA rose 13.3% to $30.76 billion. Its 7.31-times-sales multiple remains above Amgen Inc., Johnson & Johnson, and Merck & Co., Inc., but below Lilly’s.
Share performance has been more measured.
At $261.59 on October 1, AbbVie had gained 12.98% over one year and 14.49% year to date. BofA’s September 8 target of $282 implied 7.8% upside, while HSBC’s September 10 target of $315 implied 20.4%.
Cash flow sharpens the contrast.
AbbVie Inc. generated $16.87 billion of levered free cash flow, $5.8 billion more than Lilly, against $1.30 billion of capital expenditures. Its forward dividend yield was 2.63%. Debt was $70.89 billion and debt-to-EBITDA 2.28 times.
That cash generation is helping fund pipeline expansion.
AbbVie Is Using Cash Flow to Broaden Its Pipeline
On September 3, AbbVie Inc. completed its approximately $10.9 billion Apogee Therapeutics acquisition, adding zumilokibart and APG273. The deal is expected to dilute adjusted EPS by $0.14 in 2026 and about $0.46 in 2027, with accretion beginning in 2032.
AbbVie nevertheless reaffirmed 2026 adjusted EPS guidance of $13.87 to $14.07.
Wall Street is incorporating that pipeline into estimates. BofA raised its September 8 target to $282 from $276 and maintained Buy after adding zumilokibart. On September 30, all three zumilokibart regimens met the primary endpoint in Phase 2 APEX Part B, with the mid-dose selected for Phase 3.
Obesity adds another avenue. On September 30, Phase 1 ABBV-295 showed least-squares mean weight reductions of 7.8% to 9.8% across weekly cohorts at Week 12; every-other-week and monthly dosing produced 9.7% and 7.9% at Week 13, versus about 0.3% for placebo.
That pipeline expansion sits beside a cash-flow profile distinct from Lilly’s reinvestment-heavy model.
Institutional Positioning Increased in Both Stocks
Institutional positioning increased in both.
Second-quarter 2026 13F filings show Lilly hedge fund ownership rising to 152 funds from 132, with holdings increasing to $17.24 billion from $12.58 billion. Among the largest positions, Fisher Asset Management increased its Lilly stake by 5%, AQR Capital Management by 22%, while Citadel increased its common-stock position by 292%.
AbbVie’s fund count edged up to 88 from 87, but activity among its largest holders was stronger: Fisher added 5%, while Citadel, D.E. Shaw, and AQR increased their positions by 547%, 213%, and 127%, respectively. Marshall Wace also built a nearly 3 million-share position. AbbVie’s total hedge fund holdings rose to $8.56 billion from $4.25 billion. The filings are backward-looking quarter-end snapshots rather than real-time positions.
Short positioning remained modest.
As of September 15, Lilly had 7.52 million shares short, or 0.84% of float, with a 3.09 short ratio, versus 6.56 million the prior month. AbbVie Inc. had 19.49 million shares short, or 1.23% of float, with a 4.44 ratio, versus 18.3 million previously.
The valuation gap reflects different financial profiles.
Lilly combines faster revenue and EBITDA growth with greater capital intensity and lower leverage; AbbVie combines slower growth with higher free cash flow, a higher dividend yield, and greater leverage.
The next tests are whether Eli Lilly and Company can translate its expanding obesity portfolio and manufacturing investment into commercial returns, and whether AbbVie Inc. can sustain growth through Skyrizi and Rinvoq while advancing its acquired pipeline assets.
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