Eli Lilly and Company‘s LLY stock has risen 5.8% since it announced solid second-quarter results on Aug. 5. Lilly’s earnings and revenues comfortably exceeded estimates. Revenues rose 48% year over year to $22.97 billion while adjusted EPS rose 33% to $8.38.
Mounjaro and Zepbound remained the primary growth engines, with both drugs beating their respective consensus estimates. Newer medicines also made meaningful contributions across immunology, oncology and neuroscience. The company also raised its sales expectations for the second time this year.
However, a single quarter’s results are not so important for long-term investors. To make an informed decision on whether to buy, sell or hold the stock, it is important to evaluate the company’s fundamentals by examining its key strengths and weaknesses.
Strong Growth of LLY’s GLP-1 Drugs
Lilly has seen extraordinary momentum in its cardiometabolic franchise. Its blockbuster drugs, Mounjaro for type II diabetes and Zepbound for obesity, have become some of the fastest-growing medicines in pharmaceutical history, gaining from enormous global demand for GLP-1 therapies. These therapies account for around 65% of the company’s total revenues and have become key top-line drivers for Lilly, with demand rising rapidly.
In the first half of 2026, the drugs generated combined sales of $27.6 billion. Robust growth trends in the U.S. incretin analogs market and positive uptake trends of Mounjaro and Zepbound in new international markets led to strong sales growth, with the positive trend expected to continue. On the call, Lilly said that though Mounjaro’s revenue growth was robust in the second quarter, future growth will depend increasingly on market expansion rather than share gains.
Mounjaro and Zepbound are also consistently gaining approvals for new indications.
Lilly’s newly launched once-daily oral GLP-1 pill, Foundayo (orforglipron) for treating obesity, generated $98 million in sales in the second quarter, its first full quarter on the market.
Medicare access is becoming an increasingly important growth driver for Lilly’s obesity portfolio. Eligible Medicare Part D beneficiaries gained access to Zepbound and Foundayo for weight management through the Medicare GLP-1 Bridge program beginning July 2026, while Mounjaro already has Medicare coverage for its type II diabetes indication.
Lilly’s Broad Obesity Pipeline
The obesity market is still in the early stages of expansion, with millions of eligible patients yet to begin treatment. As manufacturing capacity improves and global reimbursement gradually expands, Lilly has significant room to grow sales over the next several years. To maintain leadership in the GLP-1 market, Lilly is developing several next-generation, more powerful and more convenient GLP-1–based treatments, including oral options and multi-acting candidates.
Foundayo, which offers the benefits of GLP-1 therapy in a pill form, can prove to be a commercial game-changer for Lilly. Oral pills will be a more convenient alternative to the currently available once-weekly injectable obesity treatments like Zepbound and rival Novo Nordisk‘s NVO Wegovy.
The launch uptake for Foundayo has been encouraging as Lilly expands physician engagement and direct-to-consumer promotion in the United States. Lilly has also secured coverage across all three major PBMs. Lilly is also continuing Foundayo’s international expansion. Foundayo is currently under regulatory review in more than 40 additional countries, with further approvals expected later this year. Lilly expects to launch Foundayo in most international markets by 2027.
Lilly expects Foundayo to become a multi-indication cardiometabolic opportunity. For the type II diabetes indication, Lilly has filed regulatory applications in several countries, including the United States. In addition to obesity and type II diabetes, Lilly is also evaluating Foundayo in six phase III studies for other diabetes and obesity-related diseases, with data from some of these expected later this year.
In its GLP pipeline, retatrutide is one of Lilly’s most important late-stage candidates, as it targets three biological pathways — GLP-1, GIP and glucagon — potentially offering greater weight-loss and metabolic benefits than existing medicines, which mostly act on one or two biological pathways. The company is evaluating retatrutide in type II diabetes and obesity, along with other indications like obstructive sleep apnea (OSA), knee osteoarthritis, chronic low back pain and MASH, in late-stage studies. Across its TRIUMPH program, retatrutide has demonstrated profound levels of weight loss and improvements in A1C, cardiovascular risk factors, osteoarthritis pain and sleep apnea.
Lilly has completed the clinical data package needed to support global regulatory submissions for retatrutide in obesity, obstructive sleep apnea and knee osteoarthritis pain. The company plans to submit the treatment to the FDA in the first quarter of 2027. If approved, retatrutide could become another multibillion-dollar product.
LLY Successfully Diversifies Beyond GLP-1
Lilly’s investment case is no longer dependent solely on its GLP-1 franchise. Lilly has secured approvals for several non-GLP1 therapies over the past few years. These include Omvoh for treating ulcerative colitis and Crohn’s disease, BTK inhibitor Jaypirca for mantle cell lymphoma and chronic lymphocytic leukemia, Ebglyss for moderate-to-severe atopic dermatitis, Kisunla (donanemab) for early symptomatic Alzheimer’s disease and Inluriyo (imlunestrant) for metastatic breast cancer. These drugs are also contributing to Lilly’s revenue growth, with the positive trend expected to continue. Key product revenues outside cardiometabolic health grew 121% in the second quarter.
Lilly has also embarked on an aggressive M&A spree in the past couple of years, acquiring biotech companies across oncology, neuroscience, cardiovascular disease, gene editing, inflammation, cell therapy and vaccines to diversify its long-term growth drivers beyond GLP-1 therapies. The company has announced more than $20 billion in biotech deals this year.
Race to Make Oral Obesity Pill Intensifies
Novo Nordisk had gained approval for an oral version of its obesity drug, Wegovy, in December 2025 and launched the pill in January 2026. Novo Nordisk announced sales of around $500 million (DKK 3.22 billion) from the Wegovy oral pill in its second-quarter results announced on Aug 4. Total prescriptions for Wegovy pill reached around 2.9 million in the second quarter.
While Lilly and Novo Nordisk currently dominate this space, smaller biotechs like Structure Therapeutics GPCR and Viking Therapeutics VKTX are also developing oral GLP-1 drugs for treating obesity.
Viking Therapeutics’ dual GIPR/GLP-1 receptor agonist, VK2735, is being developed both as oral and subcutaneous formulations for the treatment of obesity. Viking plans to advance oral VK2735 into phase III development for obesity in the fourth quarter of 2026.
Structure Therapeutics recently initiated the phase III ACCOMPLISH program on its once-daily oral small molecule GLP-1 receptor agonist, aleniglipron.
LLY’s Stock Price, Valuation and Estimates
Lilly’s stock has risen 9.8% so far this year compared with the industry’s increase of 11.5% over the same timeframe.
LLY Stock Outperforms Industry
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From a valuation standpoint, Lilly’s stock is expensive. Going by the price/earnings ratio, the company’s shares currently trade at 27.99 forward earnings, higher than 18.47 for the industry. However, the stock is trading below its 5-year mean of 34.57.
LLY Stock Valuation
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The Zacks Consensus Estimate for 2026 has risen from $34.55 to $35.93 per share over the past 30 days, while that for 2027 has risen from $45.10 to $45.87 per share over the same timeframe.
LLY Estimate Movement
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Stay Invested in LLY Stock
Lilly has its share of problems. Prices of most of Lilly’s products are declining in the United States. Price is expected to continue to be a drag on top-line growth in the low to mid-teens percentage in 2026. Rising competition in the GLP-1 diabetes/obesity market is a key headwind. Also, sales of late-life cycle products like Trulicity, Taltz and Verzenio are expected to be flat to down in 2026.
Also, second-half sales growth could be slower than in the first half, as the U.S. rebate/discount estimate adjustments that benefited first-half sales are not expected to recur in the second half. Moreover, the second half faces tougher comparisons from prior-year international launches and normal vacation seasonality in Europe. Moreover, U.S. diabetes has also historically shown fourth-quarter seasonality. Due to these factors, second-half percentage growth may appear to decelerate, though Lilly expects significant absolute-dollar growth in the second half.
Nonetheless, Lilly remains one of the most compelling growth stories in the pharmaceutical industry, supported by its significant price appreciation, dominant position in the rapidly expanding obesity and diabetes markets, a diversified late-stage pipeline and strong financial performance. While the stock trades at a premium valuation after a remarkable multi-year rally, the company’s long-term growth prospects remain among the strongest in the healthcare sector.
An existing investor should stay invested in this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
New investors may consider accumulating on market corrections rather than buying aggressively at current levels.
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