Eli Lilly Earnings: Strong Weight-Loss Drug Sales Expand Margins, Leading to Valuation Increase

We raise our Eli Lilly fair value estimate to $540 from $500 following stronger-than-expected first-quarter results. In particular, pricing drove 10 percentage points of the 26% top-line growth seen in the quarter, which is expanding gross margins faster than we expected. We believe the strong pricing power of cardiometabolic drug Mounjaro supported a major part of the pricing gains. While Lilly expects a deceleration in pricing gains in the second half of the year as discounts related to saving cards annualize, the robust pricing power showcases the strength of Lilly’s wide moat.