Ahead of Earnings, Is Eli Lilly Stock a Buy, a Sell, or Fairly Valued?

Eli Lilly is set to release its first-quarter 2026 earnings report on April 30. 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
  : $870.00
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : High

Eli Lilly Earnings Release Date

• Thursday, April 30, before the start of trading

What to Watch for in Eli Lilly’s Q1 Earnings

• Although we don’t expect this to be part of the reported first-quarter results, we expect Lilly management to discuss early prescription trends and how the new oral obesity drug Foundayo is being received in the market. We already assume $1.7 billion in Foundayo sales this year, with international sales rising above US sales as early as 2027, due to significant advantages over Novo Nordisk’s NVO Wegovy pill.
• Novo is still not committing to its own oral obesity launch timelines outside the United States, and it could struggle more to manufacture its more complex drug (a peptide, instead of Eli Lilly’s small molecule).
• We’re looking for more information on recent acquisitions and development strategy. Lilly got Foundayo through a business development deal with Chugai CHGCF, and the firm seems to be making more smart bets on new therapeutic areas and technologies. For example, it appears to have bet wisely on having a variety of options available (injectable, oral, and gene editing) for lp(a) targeting, which is likely the next big consideration for reducing cardiovascular risk.
• Deals this year could see strong market potential for new sleep disorder drugs (Centessa) or immunology therapies (Ventyx), in addition to new types of CAR-T cell therapy that could be used for a wider range of cancer and autoimmune disease patients (Orna and Kelonia deals).
• We’ll see if Mounjaro and Zepbound can grow through price adjustments. Lilly’s 2026 growth is heavily tied to continued growth for these diabetes and obesity medications. Overall 2026 revenue growth guidance is at 25% at the midpoint. This implies very strong volume growth in new areas (like government payers in the US and international markets) and share gains from Novo, given the lower prices now available in the US cash pay market. We’re watching for any updates on pricing evolution among US patients who get Mounjaro/Zepbound through private (employer-based) coverage, as these prices are likely eroding this year as well.
• We believe shares look fairly valued, but any dips on obesity pricing or Foundayo competitiveness concerns would likely be missing the very diversified, strong pipeline Lilly is building with Mounjaro/Zepbound profits.

Fair Value Estimate for Eli Lilly

With its 3-star rating, we believe Lilly stock is fairly valued compared with our long-term fair value estimate of $870 per share, up from $770 following strong 2025 results and management’s 2026 outlook. In aggregate, the company looks well-positioned to drive top-line growth. We project a 27% top-line growth rate in 2026 and a 20% growth rate in 2027, with double-digit growth through the end of the decade.

Read more about Eli Lilly’s fair value estimate.

Economic Moat Rating

We assign Lilly a wide economic moat. This reflects our belief that its patent-protected drugs carry strong pricing power, which enables the firm to generate returns on invested capital in excess of its cost of capital. Lilly’s diversified product portfolio means the company’s top drugs represent only a moderate number of total sales, although the top drug (in 2025), Mounjaro/Zepbound, represented 56% of total sales and is poised to grow to north of 60% of sales in 2026; they have patent protection until at least 2036.

We think the firm does face environmental, social, and governance risks, particularly related to potential US drug price-related policy reform to increase access by lowering drug prices (close to 60% of total sales are generated by prescription drug sales in the US), although we don’t see these risks as material for Lilly.

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 a solid financial footing. We expect debt/EBITDA to fall from 3 times in 2023 to below 1 times in 2026. With its strong growth prospects, we don’t expect Eli Lilly to need to make any major acquisitions to drive growth. Nevertheless, we expect tuck-in acquisitions to augment growth for the firm 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. The cone of uncertainty for its weight loss drugs is higher, as several variables are affecting the sales potential, including the level of insurance coverage and pricing. Alzheimer’s drug Kisunla could become another major new drug, but its outlook also has a wide range of outcomes, as the visibility on market uptake is less clear.

Beyond product-specific uncertainties, Eli 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. We assume a more than 50% probability of Lilly seeing future costs related to product governance ESG risks (such as off-label marketing or litigation related to side effects), and model base-case annual legal costs at 3% of non-GAAP net income—on the high end relative to peers, as Lilly’s product portfolio is more prone to possible litigation.

Read more about Eli Lilly’s risk and uncertainty.

LLY Bulls Say

• Lilly’s strong position in weight-loss drugs should drive industry-leading growth.
• 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 for Kisunla’s success remain high due to bottlenecks in patient diagnosis, required scans and monitoring, and competition.
• Several of the company’s next-generation cardiometabolic drugs could lead to cannibalization of current approved Eli Lilly drugs.
• Competition for Zepbound could significantly increase over the next three years from Novo and new entrants.

This article was compiled by Jillian Moore.