Is LLY Stock Cheaper Than It Looks

At about $1,182 a share, Eli Lilly (LLY) stock trades at about 33.1 times trailing earnings. Those are adjusted earnings: normalized net income with stock-based compensation added back, a basis built to sit close to the one analysts use in their forecasts. That looks expensive. Whether it is depends on two obesity drugs, on margins and on how much Lilly spends buying new medicines.

But Lilly Looks Cheaper If Analysts Are Right

Analysts expect Lilly to earn about $36.58 a share in 2026 and about $46.92 in 2027. On those forecasts, the same price is about 32.3 times 2026 earnings and about 25.2 times 2027 earnings. Neither year has been earned yet.

Two drugs account for most of the revenue. In Q2 2026, Mounjaro and Zepbound brought in $14.9 billion of Lilly's $23.0 billion of revenue. Over the last twelve months revenue grew 49.6%, while consensus asks for about 18.0% a year through 2027. The ask looks modest, but it has to be met while prices fall.

So Can Lilly Sell Enough More To Outrun Lower Prices?

Lilly's U.S. prices fell in Q2 2026 while volume pushed revenue higher. The CFO expects Zepbound's price to drop further once CVS covers it again from Q4 2026, and says volume growth will more than offset that. The Medicare GLP-1 Bridge program, running since July 1, opens obesity coverage to 20 million eligible Americans. Foundayo, Lilly's daily oral drug launched in the U.S. earlier this year, is expected to expand across major international markets in 2027.

The earnings forecast asks for more than sales. Consensus has earnings growing faster than revenue from 2026 to 2027, so analysts assume margins keep widening. Lilly's operating margin is already 49.7% over the last twelve months, against a three-year average of 39.0%.

And Can Lilly's Earnings Absorb What It Spends On Deals?

Lilly's own non-GAAP earnings, the measure its guidance uses, include the charges it takes for acquired IPR&D, the research it buys through deals. In Q2 2026 those charges came to $3.03 a share. Before that charge, management would have raised its 2026 earnings guidance by $2.78 a share at the midpoint. After it, the range sits at $35.50 to $36.50, slightly below the prior guide, even though revenue guidance went up.

Analysts put 2026 at $36.58 a share, just above the top of that range. Management has given no earnings guidance for 2027. It does say the pace and average size of its deals keep rising, and it expects to stay active in business development.

So Lilly is cheaper than the trailing multiple suggests only if three things arrive together: volume that outruns lower prices, margins that widen from an already high level, and deal charges that stay contained. Analysts are far apart on the result, with 2027 estimates running from $41.06 to $51.83 a share. The 25.2 times is the price of believing all three.

So Is Lilly Cheap If You Believe The Forecast?

Eli Lilly appears cheaper on forward estimates than on trailing earnings, but that discount depends entirely on whether those forward forecasts hold. You would need a view on drug prices, on a pill still early in its launch and on the next deal.

Doing that for every stock you hold is a job in itself. Since its inception, our rule-based High Quality Portfolio has outperformed its benchmark, a blend of three major indices.

Or start with our Forward Valuation Discount screen, which tells you where to look first.