Eli Lilly Expects Up to $87 Billion in 2026 Revenue. Here's Why the Stock Still Looks Undervalued.

Eli Lilly said it expects up to $87 billion in revenue this year, up from $65 billion last year; Mounjaro and Zepbound helped lift recent-quarter revenue 48% to $23 billion, with the two drugs contributing more than $14 billion. The article highlights Lilly's leadership in weight-loss drugs, a pipeline that includes phase 3 retatrutide studies and a planned phase 3 trial of EloraTZP, and a valuation of about 32x forward earnings. It presents the shares as undervalued, while noting that competition in oral GLP-1 drugs remains unsettled.

Analysis

The key risk is not demand, but how much of projected demand converts into durable, profitable treatment. If access broadens through oral formulations, the market expands—but convenience may also shift patients between products rather than add persistent users. That makes refill rates, discontinuation, net pricing and payer coverage more informative than launch prescriptions. Capacity relief can support volume while also weakening scarcity pricing; the margin outcome depends on manufacturing cost and rebates, not just units sold.

LLY’s valuation case is therefore unusually sensitive to estimate revisions: a forward multiple can look modest only if rapid growth persists. The article supplies no independent evidence on persistence, net prices, margins or the assumptions behind next-year estimates. Pipeline assets may extend the franchise, but phase 2 results do not establish phase 3 success, launch timing or incremental demand; combination products could also shift use from existing therapies rather than expand total economics.

Near term, momentum and optimistic estimates may support LLY, but the asymmetry is toward disappointment if prescription growth decelerates or guidance fails to validate expectations. Over 1–3 months, track prescription trends, supply and payer/access updates, and quarterly net-price/margin commentary. Over 6–18 months, oral share, treatment persistence, competitive outcomes and late-stage trial readouts determine whether growth is broadening or merely being pulled forward. NVO could benefit if oral uptake proves competitive; treating LLY’s lead as permanent is premature.

Key Decisions for Investors

• Do not chase LLY solely on the article’s “undervalued” framing. The missing inputs are current valuation versus a range of earnings outcomes, net pricing, treatment persistence and margin sensitivity; revisit after earnings or when these are verifiable.
• For existing LLY exposure, keep sizing disciplined and use guidance and prescription/access data as catalysts. A failure to sustain prescription growth alongside weaker net-price or margin commentary would falsify the growth-at-any-price thesis.
• Watch LLY versus NVO as a relative-value opportunity, not an automatic short-NVO trade: compare oral prescription share after accounting for launch timing, access and refill persistence. Consider a pair only if those measures diverge and valuation data confirm the market has not already priced the difference.
• Treat pipeline upside as optionality, not base-case earnings: reassess on phase 3 design and results, safety/tolerability, and evidence that new candidates add patients or duration rather than cannibalize current products.