Eli Lilly (NYSE:LLY) reported 48% revenue growth for the second quarter of 2026 a while ago and raised its outlook for the year. Yet the stock trades at 30.94 times forward earnings, as of October 6, well below the 45.59 it has averaged over five years. That’s an odd pairing for a company growing this fast.
Lilly is the Indianapolis drugmaker behind Mounjaro and Zepbound, its two tirzepatide medicines, with Zepbound marketed for weight loss. It earns its money selling them in the US and abroad, and it’s now adding a once-daily weight-loss pill called Foundayo. Whether the lower multiple is an opening or a warning depends on what’s driving the growth, and on what happens as price cuts start to bite.
Scale Few Rivals Can Match
Lilly’s edge starts with size in a category it largely defined. Mounjaro brought in $9.9 billion in the second quarter, up 91%, and Zepbound added $4.9 billion, up 46%. Lilly says, citing IQVIA prescription data, that Zepbound is the most prescribed injectable weight-management medicine in the US.
That scale shows up in profitability. Non-GAAP gross margin reached 86.3%, helped by cheaper production and a richer product mix even as realized prices fell. And the engine is spreading: revenue outside the US rose 80% to $8.6 billion, while Lilly’s key medicines in immunology, oncology, and neuroscience grew 121%. Curious how Lilly’s closest weight-loss rival, Novo Nordisk, is positioned heading into the next phase of the obesity market? It is looking beyond GLP-1s.
A Longer Runway Ahead
Recent news mostly widens the runway. Foundayo booked $98 million in its first quarter of sales. Medicare’s new coverage pathway, which lets eligible patients get Foundayo or Zepbound for $50 a month, is now live, and Lilly estimates that about 20 million Medicare patients may meet the clinical criteria.
Next up is retatrutide, a triple-action obesity drug. Lilly now holds the full clinical data package for obesity, sleep apnea, and knee osteoarthritis pain, and it plans to file with the FDA in the first quarter of 2027. Management also lifted 2026 revenue guidance to between $85 billion and $87 billion, up from $82 billion to $85 billion.
Is Price the Weak Spot?
The growth is volume-led. Revenue rose 48% because volume jumped 60%, while realized prices fell 13%. In the US, price slipped 3%, but Lilly says it would have dropped about 9% without favorable adjustments to rebate and discount estimates. Overseas, prices fell 36%, mostly because Mounjaro joined China’s national reimbursement list.
Lower prices came alongside far bigger volumes, and that’s the trade. It also means the story leans on volume staying hot, and Lilly’s own risk language flags pricing pressure and dependence on a few product classes. For now, volume is winning. Readers who want more large-cap healthcare ideas to compare can browse a list of them here.
Cheaper Than Its Own Past
Investors are paying $30.94 for every $1 of expected earnings. Next to the sector’s 18.83, that’s a hefty premium, so Lilly isn’t cheap in absolute terms. Next to Lilly’s own five-year average of 45.59, though, the multiple has come down a long way. The market is getting growth in return. Expected EPS growth of 28.86% in 2027 implies earnings can climb fast enough to shrink a multiple even if the share price stands still.
Lilly doesn’t add back acquired research charges, so second-quarter EPS of $8.38 already absorbs $3.03 per share of them, against $0.14 a year earlier. Reported EPS was $7.94, and full-year guidance of $35.50 to $36.50 reflects the second-quarter charges too. Short interest sits at 0.84% of the float, a relatively limited amount of bearish positioning. Few traders are betting against the stock, even with its multiple well above the sector’s.
A Discount With Conditions
Lilly’s multiple has come down because earnings have grown into it, not because the business has stalled. At 30.94 times forward earnings, investors pay less than the five-year norm for a company still lifting guidance and expected to grow EPS 28.86% in 2027. That looks like a reasonable setup for growth-minded investors who can live with a large premium to the sector. A sharp slowdown in volume growth while prices keep falling would undercut it. So would a slip in the retatrutide filing timeline.
READ NEXT: Top 10 AI Stocks That Will Skyrocket and 2 Stocks Trump Bought in July Are Now Down 17% to 20%. Time to Buy?
Hedge Fund Resource Center