Eli Lilly (LLY) investors should expect fireworks this week as the pharma giant prepares to drop its bombshell Q4 2024 earnings figures before tomorrow’s bell. Given recent price action, a buy-the-dip scenario could be on the cards.
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The company fumbled its previous earnings call, leading to a 6% drop in the stock late last year. With market performance set to return to equilibrium, LLY could be the low-hanging fruit speculators are looking for while also appealing to long-term value investors who appreciate dividends and long-term growth.
So far this year, LLY is up 7% and primed to continue its uptrend on the back of key business unit catalysts. Over the past 3 years, the stock has been up almost 250% while generating $1.5 per share in dividends.
I’ve been bullish on Eli Lilly for a while, and the recent pullback makes this reliable pharma giant even more attractive. LLY’s key target market is set to grow rapidly over the next two years, and the company is well-positioned to capitalize on it—especially with the launch of its oral weight-loss drug, Orforglipron.
Earnings Announcement Set to Propel LLY Stock Higher
Eli Lilly is set to report Q4 2024 earnings on February 6, 2025, with management expecting $13.5 billion in revenue—a massive 45% year-over-year jump. Driving this surge? Explosive demand for its weight-loss drugs Mounjaro ($3.5 billion) and Zepbound ($1.9 billion). Looking ahead, Lilly forecasts $58–$61 billion in 2025 revenue, marking a staggering 32% growth at the midpoint.
Eli Lilly’s stock dipped after its Q4 guidance came in lower than expected. With a P/E ratio of 85.9, any slowdown was bound to trigger a sell-off. While demand for GLP-1 drugs isn’t growing as fast as some hoped, seasonality may be at play—meaning a more substantial rebound could be coming as the new financial year kicks off.
Novo Nordisk (NVO) has the edge with Rybelsus, its already-approved oral GLP-1, and trades at a much lower P/E of just 27, making it the more reasonable value play. Meanwhile, Lilly is the high-growth bet, with a pipeline that could deliver big wins beyond weight loss; I’m impressed by its upcoming oral GLP-1 (Orforglipron) and an Alzheimer’s drug in the works.
I only own NVO right now, but LLY’s potential is hard to ignore. It’s pricier, but the diversified pipeline and strong momentum make the stock tempting, especially on a medium-term horizon. Tough call—do I stick with Novo, add Lilly, or go all in on both?
High Valuations Leave No Room for Error
With a towering price-to-earnings ratio nearing 90, Eli Lilly has little margin for error or underperformance. Yet, genuinely great companies often command premium valuations. My main caution is that its P/E ratio has surged 45% above its five-year average. However, this is hardly a red flag given that its earnings growth rate is 232% higher over the same period.
If I’ve learned one thing in investing, it’s that the market loves companies with plenty to admire under the hood. With January 2027 revenue of $75 billion, a net income margin of 35%, and 890 million diluted shares, the company will have diluted earnings per share of $29.50. From there, it only needs to trade at a moderate price-to-earnings ratio of 40 to reach my $1,200 price target—significant growth from the current $825 per share.
However, investors could face significant risk if the weight-loss market loses momentum over the next two years. Emerging long-term side effects could lead to reduced demand and cautious stocking by pharmacies, triggering stock price volatility amid lower revenue projections.
That’s why I’m not investing too heavily in GLP-1 stocks. Like AI stocks, their sky-high valuations and potential shifts in demand make me believe it’s wiser to hold these companies for a few years rather than taking a rigid buy-and-hold approach.
Eli Lilly Is Worth More than GLP-1 Drugs
Lilly isn’t just riding the weight-loss drug wave—it’s building a balanced, future-proof pipeline. By diversifying its portfolio, the company reduces risk and strengthens investor confidence. Also, Lilly focuses on biologics rather than small-molecule drugs, making them more challenging for competitors to replicate. If all goes well, new treatments for various diseases like Donanemab, Mirikizumab, and Lebrikizumab could bring in up to $15 billion annually by 2030.
Moreover, Eli Lilly’s leadership is a powerhouse. Under CEO David Ricks, who took the helm in 2017, the company has thrived and outpaced its Big Pharma rivals with exceptional stock performance and steadily climbing dividends. What’s the secret? Smart acquisitions, relentless cost control, and a laser focus on high-growth opportunities. By strategically investing in innovation while keeping expenses in check, Lilly has generated massive free cash flow, fueling its future pipeline and delivering value to investors.
The more I dig into Eli Lilly’s business, the more confident I become. Beyond the GLP-1 hype, there’s a powerhouse of innovation, thoughtful leadership, and a rock-solid pipeline. This isn’t just a weight-loss drug story—it’s a long-term growth machine. And that’s why I’m staying bullish.
Is Eli Lilly a Buy, Sell, or Hold?
On Wall Street, Eli Lilly holds a Strong Buy consensus rating of 16 Buy, two Hold, and zero Sell ratings. The average LLY price target of $1,002 per share suggests a 21.3% upside over the next 12 months, reinforcing my bullish outlook. Even the lowest target of $900 offers a solid return from the current $825.
LLY Stands Out as a Superb Medium-Term Returns Generator
Eli Lilly is a powerhouse with a strong track record of success, including a 16-year dividend track record. This week’s Q4 earnings announcement will be a pivotal moment for investors, with the potential to catalyze the ongoing uptrend or push LLY into breaking its uptrend and allow the stock to reel further losses as investor confidence is shaken.
Despite last year’s earnings stumble, LLY has rebounded strongly, and its long-term growth story remains intact. With a healthy 250% gain over the past 3 years, steady-eddy dividends, and several popular drugs being commercialized — this pharma giant is well-positioned. While any stock can see ups and downs, Wall Street remains bullish, and demand for GLP-1 medications is undeniable—making LLY a smart buy.
The pharma titan’s future looks secure and set for further expansion with a diverse pipeline of innovative drugs that dovetails with growing consumer trends. Meanwhile, the recent pullback offers medium-long-term investors a superb market entry opportunity.
