Hey there, bargain hunter.
Let me tell you what a pharmaceutical company that generates $19.8 billion in a single quarter looks like. It looks like Eli Lilly (LLY) right now.
Q1 2026 revenue came in at $19.8 billion, up 56% year-over-year. Net income hit $7.4 billion, up 168%. Profit margin was about 37% ($7.4B on $19.8B). Revenue beat analyst estimates (the exact percentage varies by estimate source). EPS also beat estimates (again, the exact percentage varies by estimate source). Management raised full-year guidance to $82 billion to $85 billion in revenue, implying roughly 25% top-line growth for the full year. Management also raised full-year 2026 non-GAAP EPS guidance to $35.50 to $37.00 (up from $33.50 to $35.00).
This is not how drug companies are supposed to behave. This is how cloud platforms behave during hypergrowth.
What Is Actually Driving This
GLP-1 drugs. Specifically, tirzepatide — sold as Mounjaro for type 2 diabetes and Zepbound for obesity. Mounjaro sales grew 125% in Q1 2026. Zepbound grew 80%. Both numbers are remarkable on their own. Together, they represent one of the fastest-growing drug franchises in pharmaceutical history.
Eli Lilly entered 2026 with a new weapon too. On April 1, 2026, the FDA approved Foundayo, the company’s once-daily weight-loss pill (orforglipron), a small-molecule (nonpeptide) GLP-1 receptor agonist that can be taken any time of day without food or water restrictions. That opened an oral GLP-1 chapter that Novo Nordisk was first to enter but Lilly is determined to compete in aggressively. Uptake has been a bit sluggish early on — the new pill uses a different active ingredient than the shots — but the injectable business is growing fast enough that it barely matters for now.
Here’s where it gets interesting. Lilly’s pipeline candidate retatrutide, a triple-acting tri-agonist, has shown very large weight-loss results in clinical trials, including roughly mid-20s percent mean weight reduction at 48 weeks in a Phase 2 trial, with some reports around the high-20s percent range in later readouts. If it clears regulatory hurdles, the company does not just hold the top spot in GLP-1 — it extends the lead by several years.
The Novo Nordisk Angle
The comparison to Novo Nordisk (NVO) is unavoidable. Both companies are fighting for the same patients, the same prescriptions, and the same $100 billion market that analysts expect to materialize by the end of the decade.
Novo was first to market with both an injectable and a pill. Its pill, containing the same semaglutide as the injection, has shown around ~15% weight loss in clinical data for its higher-dose obesity-focused oral semaglutide program.
Novo warned earlier this year that it expects 2026 adjusted sales growth to be negative, in the range of -5% to -13% at constant exchange rates, reflecting its outlook for U.S. operations. That is a stark contrast to Lilly’s raised guidance. The two companies are running very different races right now.
If you want the leader, you pay for it. If you want the cheaper entry, Novo is the reset play. The right answer depends entirely on your time horizon.
The Valuation Problem
LLY trades around $1,190 to $1,200. The stock is up roughly 41% over the past year and more than 400% over five years. The trailing P/E is approximately 42x. That is not cheap. But here is the thing — earnings per share grew faster than the stock price over the last few years. Earnings have been outrunning the stock for years.
The forward picture: management guided to non-GAAP EPS of $35.50 to $37.00 for full year 2026. Lilly then raised the revenue guidance ceiling again to $85 billion. JPMorgan’s analyst Chris Schott expects total Q2 sales of roughly $20.7 billion, above the market consensus by about $300 million, and cited continued international Mounjaro expansion as the driver.
The average 12-month price target from 30 analysts is around $1,243. Bank of America raised its target to $1,334. Truist raised to $1,370. Neither of those calls reads like hype — they are tracking the earnings trajectory and not getting ahead of it.
The P/E of 42x looks rich until you notice the EPS growth rate has exceeded 50% annually for three years running. Growth at that pace tends to compress multiples faster than people expect.
The Medicare Wildcard
One development that is not getting enough attention: starting July 1, 2026, eligible seniors with Medicare Part D coverage can access certain GLP-1 drugs for weight management at a $50 monthly copay through a temporary CMS demonstration program called the Medicare GLP-1 Bridge. If that access becomes permanent and widespread, the addressable market for Mounjaro and Zepbound expands dramatically. The U.S. obesity rate is around 40% of adults. GLP-1 penetration is still in the low single digits. The runway is long.
Bull. Base. Bear.
Bull case: Q2 earnings in August deliver another beat-and-raise. Foundayo uptake accelerates. Retatrutide data impresses. Medicare access broadens. The stock re-rates toward $1,400.
Base case: Revenue grows 25% for the year as guided. The oral pill ramp is gradual. Lilly holds market share against Novo. Stock drifts between $1,100 and $1,300 as earnings growth catches up to price.
Bear case: Compounding pharmacies find ways to keep producing cheaper versions of tirzepatide despite regulatory pressure. A major clinical setback hits retatrutide. The valuation at 40x+ forward earnings compresses sharply on any earnings miss. The stock has 52-week support near $900 that feels very far away at current levels.
Cheap Investor Checklist
- Mounjaro and Zepbound combined quarterly revenue: watch for $15 billion+ in Q2
- Full-year revenue guidance: currently $82B to $85B; any raise is a positive
- Foundayo prescription trends: oral pill early uptake numbers matter in H2
- Retatrutide pipeline timeline: Phase 3 data watch
- Medicare GLP-1 Bridge program expansion: any permanence would unlock a massive new cohort
- Novo Nordisk prescription share: if Wegovy keeps losing ground, Lilly’s moat widens
- Compounding pharmacy risk: 503B rule outcome is a key regulatory watch
The GLP-1 market analysts are pricing at $100 billion by the end of the decade is not speculative. The prescriptions are happening now. The question is who owns the most of that market three years from now. Right now, Eli Lilly is the answer — and the earnings are starting to confirm it.
Whether the stock is cheap at $1,200 with a 42x multiple is genuinely debatable. What is not debatable is that the underlying business is doing something almost no pharmaceutical company has ever done at this scale, this fast. That is worth watching closely.
