Eli Lilly stock has risen 36% this year to reach a $1 trillion market capitalization – the first health-care company to reach this milestone, according to CNBC.
This raises many questions such as: Why has $LLY risen so much? Is it too late for investors to ride this wave? The short answers:
- The stock is up due to expectations-beating growth and a the potential to add revenue from a deal to lower prices of its weight loss drugs, and
- No, odds are good it is not too late to invest in $LLY.
Lilly’s rapid rise to its $1 trillion market capitalization reveals an important truth: Artificial intelligence is not the only way for a company to reach such a lofty valuation. The common element such trillion dollar companies share is the ability to sustain expectations-beating growth.
Lilly stock could double by 2028 if the company’s innovation pipeline pays off – which may have a 30% chance of happening. But there’s a 20% chance the stock could lose 30% of its value as price competition squeezes margins and new products can’t get approved. Wall Street views the stock as slightly overvalued.
Why Eli Lilly’s Stock Is Up
Last month, I suggested investors should consider buying shares in Eli Lilly, in an Oct. 21 Forbes post. Since then, the stock has risen by 33%.
My reasoning? The Indianapolis, Ind.-based pharmaceutical company combined strong profitability and rapid growth with its market-leading diabetes and obesity treatments and was developing new drugs with the potential to catalyze future growth.
Why I Was Bullish On $LLY
In October, the latest available financial results for Lilly were from the second quarter. Those results beat expectations as did the company’s forecast for 2025.
Lilly dominates the large market for diabetes and weight loss drugs – which are expected to reach $150 billion in revenue by the early 2030s, reported CNBC. More specifically, Lilly controls about 57% of the U.S. market for incretins – enjoying a competitive advantage over rival Novo Nordisk, Reuters reported.
Lilly has experienced rapid growth in demand for two drugs: Mounjaro, which helps manage blood-sugar levels in adults with diabetes, and Zepbound, for treating obesity and weight-related conditions. In Q2, sales of these products grew 68% to $5.2 billion for Mounjaro and 172% to nearly $3.4 billion for Zepbound, I wrote.
There is reason to believe Lilly will continue to grow rapidly. For example, a potential revenue booster – a new obesity treatment called retatrutide – was expected to report positive trial results late in 2025, Pharmaceutical Journal noted.
Moreover, in 2025, the Food and Drug Administration approved an Alzheimer’s therapy named Kisunla, wrote Pharmaceutical Journal.
How Lilly Came To Dominate The Market For Weight Loss Drugs
Lilly was not the first one to enter the weight loss drug market. So how did the company achieve this leadership position?
Lilly’s journey to the top of the weight loss drug market began in May 2022, noted CNBC. That’s when the FDA approved tirzepatide – the drug Lilly first sold as Mounjaro – a name “thought to be derived from Mount Kilimanjaro, suggesting the drug’s role in overcoming a challenge,” wrote Longevity.Technology.
At that point Lilly was in competition with Novo Nordisk’s diabetes injection Ozempic, which had entered the market a few years earlier. Lilly’s competitive advantage emerged after Mounjaro was able to treat both diabetes and weight loss more effectively than did Novo Nordisk’s drugs, CNBC reported.
How so? Tirzepatide imitates two gut hormones: GLP-1 – which helps reduce food intake and appetite – and GIP – which suppresses appetite and may “improve how the body breaks down sugar and fat,” wrote CNBC.
Semaglutide — the active ingredient in Novo Nordisk’s treatments for diabetes (Ozempic) and weight loss (Wegovy) — only targets GLP-1, noted CNBC.
Mounjaro generated more than $1 billion in annual sales during its first year on the market and Lilly won approval in late 2023 for obesity treatment Zepbound which now competes with Wegovy, added CNBC.
In addition to being more clinically effective, Lilly was also faster to scale up manufacturing and distribution. For instance, in 2021, supply shortages impeded the growth of Novo’s Wegovy – which presented Lilly an opening when Mounjaro launched, reported Reuters.
What Drove $LLY Stock Up In The Last Month
Since October, Eli Lilly stock has been propelled by expectations-beating third quarter results and a deal to lower prices of its weight loss drugs.
Lilly’s Oct. 30th third quarter earnings report beat Wall Street estimates and raised guidance. Specifically, Lilly’s Q3 revenue grew 54% to $17.6 billion — about $1.5 billion above estimates; adjusted earnings per share of $7.02 was more than $1 a share higher than the consensus estimate; and the company raised revenue and EPS guidance to $63.25 billion and about $22 a share respectively, according to Yahoo Finance.
Lilly’s diabetes and weight loss drugs led the way to this rapid growth. Mounjaro revenue more than doubled to $6.52 billion – beating projections by over $1 billion. Zepbound sales added 185% to $3.59 billion – exceeding estimates.
The company sees strong demand and solid prospects. Progress in the company’s R&D pipeline includes the advancement of weight-loss drug orforglipron to FDA approval, said Lilly CEO since 2017 David A. Ricks – under whose tenure the company has added about $919 billion in market capitalization, reported the New York Times.
Ricks was played by Mikey Day in a Nov. 8 Saturday Night Live cold opening skit as “a Lilly guest” fainted Nov. 6 in the Oval Office following the announcement of a deal to lower some Zepbound prices. For instance, the deal will offer a $50 discount off the current price of $499 a month to buy higher doses if patients “use their own money,” noted the Times, which wrote this deal could boost Lilly’s revenues.
Will $LLY Keep Rising?
Can Eli Lilly double its market capitalization? Whether $LLY reaches $2 trillion depends on how well it navigates White House pressure to lower prices – based on Most-Favored-Nation executive orders — while expanding volume from new insurance coverage and new drug approvals.
Here are three scenarios Lilly’s future market capitalization:
- Status quo volume play ($2 trillion not reached before 2030). In this scenario – with a 50% probability — Lilly’s lower margins resulting from price cuts are partially offset by increased volumes from government programs such as Medicaid and direct-to-consumer prices through the Generous Model program, according to JDSUPRA.
- Best case innovation dominance ($2 trillion reached by 2028 or 2029). This 30% probability scenario assumes orforglipon is approved by the FDA in early 2026, Kisunla is adopted for Alzheimer’s due to July 2025 updated dosing labels, per a Lilly release, that improve safety profiles; and Lilly sustains its lead over Novo Nordisk.
- Worst case margin crunch (Market cap falls to between $700 billion and $800 billion). In this 20% probability scenario, Lilly’s margins decline as private insurers demand price cuts to match government-imposed discounts, rivals – spurred by the FDA Commissioner’s National Priority Voucher, JDSUPRA noted – introduce less expensive versions of Lilly’s diabetes and weight loss drugs, and safety or other concerns delay the launch of the company’s new products.
Wall Street consensus views Lilly stock as overvalued based. Based on 20 Wall Street analysts offering 12 month price targets for Eli Lilly – the shares are 2% overvalued based on an average price target of $1,042.89, according to TipRanks.