Morningstar

Eli Lilly Earnings: Solid Performance Overshadowed by Novo’s Obesity Coverage Win

We continue to view Lilly stock as overvalued.

Eli Lilly and Company, Pharmaceutical company headquarters.
Cristina Arias/Cover via Getty
Securities in This Article
CVS Health Corp
(CVS)
Eli Lilly and Co
(LLY)
Novo Nordisk AS ADR
(NVO)

Key Morningstar Metrics for Eli Lilly

What We Thought of Eli Lilly’s Earnings

Eli Lilly’s LLY first-quarter revenue grew 45%, as combined sales for Mounjaro (diabetes) and Zepbound (obesity) rose dramatically to reach $6.2 billion, up year over year from $2.3 billion. Separately, Novo Nordisk NVO announced Wegovy’s preferred status as of July 1 with pharmacy benefit manager CVS Health CVS.

Why it matters: Lilly met financial expectations and is on track to meet 2025 guidance (apart from acquisition charges for a breast cancer drug in-licensed in the quarter), but the CVS announcement highlights concerns that Novo could remain a strong commercial competitor in obesity.

  • During the first quarter, Zepbound showed even stronger share gains than we had expected, with US prescription share up from the end of the fourth quarter by 13 percentage points to 60%. We think Mounjaro/Zepbound sales could surpass $30 billion this year (83% growth).
  • We think price competition with Novo and other future competitors means non-GAAP performance margin (similar to operating margin) could only improve another 400 basis points in the long run, from 42.6% in the quarter to 46.7% by 2030.

The bottom line: We’re maintaining our $650 fair value estimate for wide-moat Lilly following solid results that show strong share gains, but we’re cautious on pricing, even before the entry of a third competitor. We think the market was assuming more stable pricing and greater Lilly dominance.

  • We expect Lilly to continue to gain market share over Novo this year as part of a global $75 billion GLP-1 market, with potential for the market to reach $200 billion by 2031.
  • We think upcoming orforglipron data in obesity in the third quarter will help clarify how competitive the molecule will be in the US market, where high-efficacy injectables are entrenched and Novo also hopes to launch an oral version of Wegovy in 2026.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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