LLY Stock Study (10-9-26)

Posted by Mark on September 25, 2026 at 06:41 | Last modified: October 9, 2026 09:32

I recently studied Ely Lilly and Co. (LLY, $1169.60).

M* writes:

     > Eli Lilly is a drug firm with a focus on neuroscience,
     > cardiometabolic, cancer, and immunology. Lilly’s key
     > products include Verzenio and Jaypirca for cancer;
     > Mounjaro, Zepbound, Foundayo, Jardiance, Trulicity,
     > Humalog, and Humulin for cardiometabolic; and Taltz
     > and Olumiant for immunology.

Over the past decade, this mega-size (over $50B annual sales) company has grown sales and EPS at annualized rates of 11.1% and 22.4% (excluding 2017 negative EPS that otherwise calculates to 71.7%). Lines are mostly up, straight, and parallel except for sales dip in ’19 and EPS dips in ’21 and ’23. Five- (10-) year EPS R^2 is 0.74 (0.82), and Value Line (VL) gives an Earnings Predictability score of 60. Shares outstanding decrease 15.3% (1.8% per year).

Over the past decade, PTPM trails peer and industry averages despite increasing from 15.9% to 39.5% (’25) with a last-5-year mean of 26.4%. ROE is greater than peer and industry averages while increasing from 18.2% to 86.3% (’25) with a last-5-year mean of 69.3% (shareholder equity consistently positive and increasing 7.4%/year). Debt-to-Capital is greater than peers but less than the industry while increasing from 42.4% to 61.6% (’25) with a last-5-year mean of 65.5%.

Interest Coverage is 29 (per Stock Analysis on Net) and Quick Ratio 0.68 per M* who assigns a “Wide” Economic Moat, “Exemplary” rating for Capital Allocation, and an A grade for Financial Health (per BI website). VL gives an A++ rating for Financial Strength.

RightStock—a new tool on the BI website that I will be tracking for informational purposes—gives a fitness score of 66 (“limited fit” citing inconsistent earnings growth; EPS has nearly doubled in each of the last two years) and opportunity score of 94.

With regard to sales growth:

• YF gives YOY ACE 35.7% and 15.6% for ’26 and ’27, respectively (based on 28 analysts).
• Zacks gives YOY ACE 36.4% and 14.0% for ’26 and ’27, respectively (6 analysts).
• VL projects 14.8% annualized growth from ’25-’30.
• CFRA projects 34.6% YOY and 20.8% per year for ’26 and ’25-’27, respectively.
• M* offers a 2-year ACE of 26.1% but projects 17.3%/year from ’25-’30 in Equity Report.

My 14.0% forecast is at bottom of the range.

With regard to EPS growth:

• MarketWatch gives ACE 41.0% and 31.8% per year for ’25-’27 and ’25-’28 (based on 32 analysts).
• Nasdaq.com gives ACE 23.3% and 15.3% per year for ’26-’28 and ’26-’29 [9 / 3 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year annualized growth of 21.6%.
• Finviz gives 5-year annualized ACE of 30.6% (1).
• Argus projects 5-year annualized growth of 20.0%.
• LSEG has LTG at 29.3%.
• YF gives YOY ACE of 50.5% and 30.6% for ’26 and ’27, respectively (27).
• Zacks gives YOY ACE 51.4% and 27.3% for ’26 and ’27 (9) along with 5-year annualized of 22.2%.
• VL projects 19.9% per year from ’25-’30.
• CFRA projects 51.3% YOY and 34.5% per year for ’26 and ’25-’27, respectively.
• M* gives ACE long-term growth of 21.9% and projects 21.5%/year from ’25-’30 in Equity Report.

My 18.0% per year forecast is below the long-term-estimate range (mean of eight: 23.4%). Initial value is ’25 EPS of $22.95/share rather than 2026 Q2 EPS of $29.80 (TTM).

My Forecast High P/E is 25.0. Over the past 10 years, high P/E increases from 33.1 to 48.5 (’25) with last-5-year mean of 49.7 (excluding ’23 and ’24 upside outliers of 109 and 83.1) and a last-5-year-mean average P/E of 39.4 (also excluding corresponding low P/E upside outliers). I am below the range.

My Forecast Low P/E is 25.0. Over the past 10 years, low P/E increases from 24.9 to 27.2 (’25) with a last-5-year mean of 29.1 (excluding 52.1 and 49.4 upside outliers in ’23 and ’24). I am aggressively forecasting lowest value since ’20.

My Low Stock Price Forecast (LSPF) of $573.80 is default based on initial value from above: 50.9% less than previous close and 26.8% less than the 52-week low.

Over the past 10 years, payout ratio (PR) falls from 79.1% to 26.1% (’25) with a last-5-year mean of 52.2%. My 26.0% forecast is below the range.

These inputs land LLY in the SELL zone with a U/D ratio of 0.2. Total Annualized Return (TAR) is 3.0%.

In this study, PAR (using Forecast Average—not High—P/E) and TAR are equal and less than the risk-free rate (T-bills): not currently viable as an investment candidate.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on 272 studies done in the past 90 days (my study and 115 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 18.9%, 18.6%, 43.0, 30.0, and 52.2%, respectively. I am lower across the board. VL projects a future average P/E of 24.0 that is lower than MS (36.5) and lower than mine (25.0).

MS high / low EPS are $66.29 / $28.64 versus my $52.50 / $22.95 (per share). My high EPS is less due to a lower growth rate and initial value. VL (M*) high EPS of $60.00 ($63.69) is in the middle.

MS LSPF of $816.30 implies a Forecast Low P/E of 28.5: less than the above-stated 30.0. MS LSPF is 5.0% less than the default $28.64/share * 30.0 = $859.20 resulting in more conservative zoning. MS LSPF is still 42.2% greater than mine.

MOS is robust in the study because my inputs are equal to or less than historical/analyst/MS estimates/ranges. Supporting the MOS is MS TAR exceeding mine by 17.6% per year (unreasonably high to make the math work) and my lower LSPF.

With regard to valuation, PEG is 1.5 and 1.9 per Zacks and my projected P/E, respectively: fairly valued (1.2 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 1.01. “Quick and dirty” cash flow (including capex, which Google AI insists is correct) has stock undervalued by 16%. M* reports stock overvalued by 21%.

My Forecast High and Low P/E are identical out of necessity. Even with the latter [in my opinion] so aggressive [because it’s greater (less) than four (three) of the last 10 years (three excluded)], the stock is trading far above a buy point. Choosing a LSPF 30% below previous close (my alternative rule of thumb) would correspond to a low P/E higher than anything in the last 10 years save upside outliers.

I am giving one HOLD recommendation for current shareholders because of the double-digit annualized sales projections.

Per U/D, LLY is a BUY under $758/share. Given forecast high price ~$1312, [1312.5 / ((13.87 / 100 ) +1 ) ^ 5] ~ $685 meets the BetterInvesting® TAR criterion.

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