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News  ›  The Motley Fool

Is It Time to Dump Your Shares of Eli Lilly?

The Motley Fool Logo The Motley Fool By Reuben Gregg Brewer
Is It Time to Dump Your Shares of Eli Lilly?

Eli Lilly's stock has surged 470% over five years due to blockbuster GLP-1 weight loss drugs Mounjaro and Zepbound, which account for 54% of revenue. However, the article warns that the stock's valuation is stretched at a P/E of 52, and the company faces near-term competition from Novo Nordisk's newly launched GLP-1 pill, plus longer-term patent cliff risks. Investors should consider taking profits unless they believe Eli Lilly can defend its market position and develop new drugs to offset future revenue declines.

Insights
LLY   negative

Stock is overvalued at P/E of 52 versus pharma average of 10; faces near-term competition from Novo Nordisk's GLP-1 pill; long-term revenue risks from patent expiration on blockbuster drugs; 54% of revenue concentrated in two drugs creates dependency risk.