Forget Eli Lilly: These 2 Stocks Have More Upside

Eli Lilly’s GLP-1 drugs remain strong, with first-quarter 2026 sales of Mounjaro and Zepbound up 125% and 80%, but the stock trades at 34x earnings versus a 23x pharma average. Novo Nordisk is catching up with 1.3 million prescriptions for its newly launched GLP-1 pill and raised full-year 2026 guidance, while Pfizer is still rebuilding after dropping its GLP-1 candidate. The article argues Lilly’s valuation is rich, Novo offers a 4% dividend yield, and Pfizer offers 6.5% yield but higher risk.

Analysis

The market is treating GLP-1 as a pure winner-take-most category, but the more important second-order effect is that valuation dispersion is now doing a lot of the work. LLY is already priced like its current growth can continue with limited execution slippage, which leaves little room for manufacturing issues, payer pushback, or a slower-than-expected oral/next-gen rollout. That setup makes it vulnerable to even modest disappointments over the next 1-2 quarters because the multiple, not the fundamentals, is doing the heavy lifting.

NVO’s better setup is not just “catch-up” in products; it is optionality on share recovery with a more asymmetric re-rating if the pill proves durable in adherence and real-world weight loss. The dividend adds a floor, but the more important point is that capital return gives investors a way to wait for the turnaround without paying up for growth that is already fully reflected in LLY. If uptake stays strong into the next guidance cycle, the stock can recover on both earnings revisions and sentiment compression versus peers.

PFE is the most interesting contrarian because the GLP-1 setback is already well-known, so incremental bad news may matter less than a credible pipeline reset. If management can show a cleaner path on oncology and a differentiated obesity asset over the next 6-18 months, the stock could re-rate sharply off depressed expectations. The risk is balance-sheet/capital return stress if the dividend is defended too aggressively, but that tension is also why the stock can work as a sentiment turnaround rather than a pure fundamentals compounder.

Consensus is missing that the better trade may be relative value, not outright longs. LLY can stay fundamentally excellent and still underperform if the market rotates from perfection pricing into revision recovery names. In that regime, the most attractive setups are ones where the downside is already embedded and the catalyst path is clearer than the headline story suggests.

Key Decisions for Investors

• Short LLY / long NVO as a 6-12 month relative-value pair: thesis is multiple compression in LLY vs rerating in NVO if pill uptake and guidance revisions persist; target 15-20% spread capture, stop if LLY re-accelerates on strong channel data.
• Initiate a starter long in NVO with a 6-9 month horizon: attractive asymmetry from low expectations plus dividend support; use weakness around earnings/guidance updates to build, with upside tied to share recapture in GLP-1 oral adoption.
• Buy PFE only as a turnaround basket position, not a core healthcare compounder: size small, 12-18 month horizon, focused on pipeline credibility and capital allocation. Risk/reward is favorable because expectations are already distressed, but dividend sustainability must be monitored closely.
• For options, consider LLY put spreads 3-6 months out to express valuation risk with defined downside: this is a clean way to trade multiple de-rating without betting against the underlying franchise quality.
• If seeking sector exposure, prefer a relative-value basket long NVO/PFE vs short LLY rather than outright long healthcare: the market is likely to reward revision recovery and capital return more than paying peak multiples for proven growth.