Lilly dominates weight-loss drugs, and oral pills plus Medicare access can extend growth. I initiate with a buy and a $1,377 target for 16% upside.
Key points
- $14.9 billion in Q2 2026 from Mounjaro and Zepbound drove 48% sales growth in that quarter.
- 13% price fall in Q2 2026 as wider access cut net price while volume rose 60% in that quarter.
- $98 million in Q2 2026 from oral pill Foundayo starts a second leg for sales into next year.
The call
The business is superb but the price already demands a lot. At $1,190 a share today, Lilly must grow sales about 25% a year. Margins must also hold near 37% next year.
Quarterly revenue shows surge then guided slowdown ($ billions)SEC filings to Q2 2026, guidance midpoint for H2;14 Aug 2026.
I expect volume to beat price pressure. Weight prescriptions rose 31% last quarter with Lilly in the lead. New Medicare access plus oral launches next year can carry sales past that bar.
Valuation
| Driver | Estimate |
|---|
| Sales in 2027 | $107.5 billion |
| Net margin in 2027 | 38% |
| Profit in 2027 | $45.90 a share |
| Multiple in 2027 | 30 times |
| Target in 12 months | $1,377 a share |
Multiple means price divided by yearly profit per share. Thirty times fits fast growth with rich drug margins, meaning sales left after making drugs. Upside of 16% into next October beats 18% downside in a weak case and backs a buy.
Target rises or falls with 2027 sales and multiple ($ per share)SEC filings to Q2 2026; scenarios use 890M shares; Oct 2026.
Risks
- Net prices fall faster as plans demand bigger rebates, seen in monthly net sales per script into 2027.
- Oral uptake stalls if patients quit early, seen in weekly total scripts and share late this year.
- Pipeline slips if the retatrutide filing moves past next spring, seen in agency letters into 2027.
What would change my mind
I would turn cautious if volume growth fell below 20% in any quarter into next summer with no price rebound.