Eli Lilly Stock Is Up 18% This Year. Is It Still a Buy Ahead of Earnings?

Eli Lilly is set to release its third-quarter earnings report on Oct. 29. Here’s Morningstar’s take on what to look for in Lilly’s earnings and the outlook for its stock.

Key Morningstar Metrics for Eli Lilly

• Fair Value Estimate
  : $980.00
• Morningstar Rating
  : ★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : High

Eli Lilly Earnings Release Date

• Thursday, Oct. 29, 2026, before the start of trading

What to Watch for in Eli Lilly’s Q3 Earnings

• Is there enough momentum in revenue growth to allow another 2026 revenue guidance increase? Last quarter, Lilly guided to $85 billion-$87 billion in 2026 revenue. We’re modeling north of $90 billion. We expect the key driver of any decision to increase guidance will be Zepbound pricing dynamics in the United States and the continued international growth of tirzepatide, sales of which we think will reach $58 billion this year (59% growth).
• We’re also looking for details on Foundayo, which currently trails Novo Nordisk’s first-to-market oral GLP-1. We think Lilly could be moving more aggressively in international markets, and advertising spending could be helping US sales. We expect Foundayo to find its footing in the third quarter, and we think its total sales this year could reach $1.4 billion.
• We expect more info on how the Medicare obesity drug benefit that started in July could be affecting overall pricing dynamics and growth.
• We’d like to hear more details on progress with new drugs from recently closed acquisitions. We’re particularly interested in AtaiBeckley and phase 3 plans for psychedelic BPL-003 in treatment-resistant depression.
• Lilly has recently traded at a 30% premium to our $980 per share fair value estimate. We’re watching carefully for catalysts that could either let us assign more credit to Lilly’s portfolio and pipeline or provide a buying opportunity if the market overreacts to negative news.

The following are excerpts from Morningstar’s company report on Eli Lilly.

Fair Value Estimate for Eli Lilly

With its 2-star rating, we believe Lilly stock is moderately overvalued compared with our long-term fair value estimate of $980 per share.

We see peak sales for Mounjaro/Zepbound around $80 billion in the early 2030s, and Foundayo peak sales above $30 billion by the mid-2030s. In aggregate, the company looks well-positioned to drive top-line growth. We project a 37% top-line growth rate in 2026 and a 16% growth rate in 2027, with double-digit growth through the end of the decade. Lilly has already significantly expanded operating margins, and we expect them to approach 50% over the next several years (excluding acquisition charges).

Read more about Eli Lilly’s fair value estimate.

Economic Moat Rating

Patents, economies of scale, and a powerful distribution network support Lilly’s wide moat. Lilly’s patent-protected drugs carry strong pricing power, which enables the firm to generate returns on invested capital well over its cost of capital. Further, the patents give the company time to develop the next generation of drugs before generic competition arises.

Compared with peers, Lilly faces a fairly minimal patent loss headwind, with older GLP-1 therapy Trulicity going generic in 2027, followed by diabetes drug Jardiance in 2029. Tirzepatide has patent protection through at least 2036, which buys Lilly time to grow sales of the rest of its pipeline, both in cardiometabolic indications and in its other focus areas like neurology, immunology, and oncology.

Read more about Eli Lilly’s economic moat.

Financial Strength

With strong cash flows derived from a stable and diversified product portfolio, Eli Lilly remains on solid financial footing. We expect debt/EBITDA to fall from 3 times in 2023 to below 1 time in 2026. With its strong growth prospects, we don’t expect Lilly to need to make any major acquisitions to drive growth. Nevertheless, we expect tuck-in acquisitions will augment growth over the next decade.

Read more about Eli Lilly’s financial strength.

Risk and Uncertainty

We are maintaining our High Uncertainty Rating for Lilly based on a highly variable outcome for several key drug launches. Most big biopharma firms tend to have Medium Uncertainty Ratings. However, diabetes and weight-loss drugs Mounjaro/Zepbound are developing into major new drugs, and the cone of uncertainty for the drugs is higher, as several variables are affecting the sales potential, especially for the weight-loss indication, including level of insurance coverage and pricing.

Beyond product-specific uncertainties, Lilly faces tough competition from generics manufacturers and brand-name drugmakers. The company encounters considerable regulatory and legal risks, including product approvals, patent challenges, and liability lawsuits.

Our rating is not materially affected by ESG risks, although we see access to basic services (tied to drug pricing) as the biggest ESG risk that the firm needs to manage.

Read more about Eli Lilly’s risk and uncertainty.

LLY Bulls Say

• Lilly’s strong leadership in weight-loss drugs should drive industry-leading growth, given its approved drugs and well-positioned next-generation weight-loss drugs in the pipeline.
• Lilly is following its maturing cancer drug Verzenio with newer oncology therapies Inluriyo and Jaypirca, maintaining strong oncology growth potential.
• Lilly has launched a new Alzheimer’s drug (Kisunla) that could become a major blockbuster, especially since few treatment options exist for the disease.

LLY Bears Say

• The risks to success for Kisunla remain high because of bottlenecks in patient diagnosis, required scans and monitoring, and competition, particularly from Eisai/Biogen (Leqembi) and Roche (pipeline drug trontinemab).
• Several of the company’s next-generation cardiometabolic drugs could lead to cannibalization of current approved Lilly drugs, particularly the widely used Mounjaro/Zepbound.
• Competition for the weight-loss drug Zepbound could significantly increase over the next three years from established competitor Novo as well as new entrants.

This article was compiled by Colin Laidley.