Is Eli Lilly and Company (LLY) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $1,412, Eli Lilly and Company (LLY) trades 84% above TickerWorth's blended fair value of $768.99 per share — a discounted-cash-flow model cross-checked against peer multiples and asset value — meaning the market currently prices LLY overvalued vs our estimate of what the business is intrinsically worth. Our fair value sits below the market, an implied -45.5% move to close the gap if the business performs in line with our assumptions. This is an educational model, not a price target or a recommendation — the value moves with the inputs, which you can test yourself using the WACC slider below.
One of the lenses behind that blended figure is a discounted-cash-flow model, which on its own values LLY at about $840.30 per share. The rest of this page walks through that DCF — its assumptions, reverse-DCF and discount-rate sensitivity — because it is the auditable anchor of the blend.
The valuation discounts Eli Lilly and Company's projected free cash flows at a weighted-average cost of capital (WACC) of 8.1%, with a long-run terminal growth rate of 2.5%. About 81% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — LLY would need sustained revenue growth of more than 25%/yr to justify today's price, against about 17.0% a year compounded in our base case. We don't quote a precise figure here, because past about 25% a year the reverse-DCF stops being informative: it solves for revenue growth alone, holding margins, capital intensity and the forecast horizon fixed, so a price well above our fair value has nowhere to go but growth. The honest reading is that the price implies growth this model can't reconcile — not that we forecast it.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, LLY's modeled DCF value ranges from about $574.99 to $1,526 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what Eli Lilly and Company would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of LLY's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind LLY's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $65,179,000,000 | FY2025 Form 10-K (filed 2026-02-12) — Consolidated Statements of Operations and Note 2 revenue-by-product table: Total revenue $65,179M: net product revenue $60,958M + collaboration and other revenue $4,221M. By product (10-K MD&A): Mounjaro $22,965M (U.S. $13,651M + outside U.S. $9,315M), Zepbound $13,542M, Verzenio $5,723M, all other products $22,949M — the four lines sum exactly to the consolidated total. Tirzepatide (Mounjaro + Zepbound) was $36,507M, 56% of revenue. FY2025 revenue grew 45% on FY2024's $45,043M (10-K comparative column). |
| Base EBIT margin | 40.4% | FY2025 Form 10-K (filed 2026-02-12) — Consolidated Statements of Operations; Q3 2026 Form 10-Q (filed 2026-10-29) — Consolidated Condensed Statements of Operations (cross-check): DERIVED the way this tracker's ZTS model derives it, because Lilly prints no operating-income line: revenue $65,179M − cost of sales $11,052M − research and development $13,337M − marketing, selling and administrative $11,094M − acquired in-process research and development $2,910M − asset impairment, restructuring and other special charges $484M = $26,302M = 40.35%. The $571M of other—net expense below that build is non-operating (interest expense on borrowings was $895M, per the 10-K debt note) and reconciles exactly to pre-tax income of $25,731M. TWO FACTS ABOUT THIS MARGIN. (1) Lilly's own 'performance margin' — gross margin less R&D and MS&A, the measure it guides to — was 45.56% in FY2025 ($54,127M − $13,337M − $11,094M); the 5.21-point gap to the GAAP build is the acquired-IPR&D and impairment load, which this model CHARGES rather than excludes, for the reason in special_cases: Lilly buys pipeline every year. (2) CROSS-CHECKS on the identical build: H1 2026 (Q2 10-Q) printed 41.83% ($17,893M on $42,773M), and the first nine months of 2026 (Q3 10-Q) printed 39.46% — $67,170M − $10,778M − $11,576M − $9,489M − $7,541M − $1,285M = $26,501M, the operating income the Q3 release reports — with Q3 alone at 35.3% because $4,181M of IPR&D landed in one quarter. The load is lumpy in timing, not in existence. |
| Forecast revenue growth | 40% → 19% → 13% → 8% → 7% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | FRED DGS10 — 10-year US Treasury constant maturity yield: Shared house input: the same 5.24% used by every researched model in this tracker, held so values stay comparable across companies. The current FRED print is lower (4.96% on 2026-10-22); refreshing it for Lilly alone would print $809.84 and break comparability — it is a tracker-wide update, flagged here rather than smuggled into one company's model. |
| Beta | 0.61 | Assumption — Yahoo Finance LLY quote (delayed) — published beta; own regressions of LLY on the S&P 500 from Yahoo daily/weekly/monthly price history: Published beta is 0.41-0.46 (Finnhub reads 0.41; other delayed feeds ~0.45). Measured here against the S&P 500 from Yahoo adjusted-close history (log returns): 0.41 (5Y monthly), 0.51 (3Y monthly), 0.42 (2Y weekly), −0.01 (1Y weekly), 0.57 (2Y daily) — a median of 0.42, confirming the published figure rather than contradicting it. NORMALIZED UP to 0.61 with the standard Blume adjustment of that median (0.67 × 0.42 + 0.33 = 0.61), the same treatment this tracker applied to BMY (0.184 → 0.45), SNY (0.281 → 0.52) and PFE (0.276 → 0.52), and close to NVO's normalized 0.60. CONSERVATIVE: it raises WACC and LOWERS the value — at the raw 0.42 the value is $932.26. Reason: the five-year window is dominated by a company-specific event — the incretin re-rating that took Lilly from a mature pharma multiple to the largest drugmaker in the world while the market did something else — which a regression reads as low correlation, not low risk. At 0.42 the cost of equity would be 7.34%, barely above what Lilly itself paid on new bonds in May 2026 (4.15%-5.70%), for a company with 65% of its revenue in one molecule. The 1Y weekly window (−0.01) is the clearest illustration: Lilly rose almost regardless of the market, which is a statement about the past five years, not about the risk of the next ten. NOT RE-MEASURED at the 2026-10-30 Q3 refresh (four days after the first build; the HOOD/MA refresh convention in this tracker is to re-measure on a slower cadence than the filing roll, and no Q3 filing item bears on it). |
| Terminal growth | 2.5% | Assumption — House default — long-run nominal growth ceiling applied across the tracker: Shared house input (2.5%), identical in every researched model in this tracker. For Lilly this is a real judgement, not a formality: the terminal year (2030) sits six years before the U.S. tirzepatide compound patent expiry (2036, per the 10-K), so 2.5% forever assumes Lilly keeps replacing each wave of expiries the way it replaced the pre-incretin portfolio — and the business-development load charged inside the forecast margins is what pays for that replacement. |
| Diluted shares | 894M | Q3 2026 Form 10-Q (filed 2026-10-29) — Consolidated Condensed Statements of Operations (shares used in calculation of earnings per share), cover page, and Consolidated Condensed Balance Sheets (employee benefit trust); FY2025 Form 10-K Note 13 (employee benefit trust): Weighted-average DILUTED shares for the nine months ended 2026-09-30: 894.4M (basic 892.9M; Q3 alone 893.4M; FY2025 diluted was 899.3M — the count is falling on buybacks: $4.1B repurchased in FY2025 and $4,334M in the first nine months of 2026, with $6.6B left on the December 2024 $15.0B authorization at 2026-09-30). Updated from 894.8M (the H1 2026 weighted count) on the same convention. THE CENSUS QUESTION, documented rather than buried: Lilly has 940,745,031 shares on the Q3 2026 10-Q cover page at 2026-10-26 — roughly 46M more than the EPS count. Almost all of that gap is the 50 million shares held by Lilly's employee benefit trust (10-K, Note 13): shares that legally exist but are carried as a $3,013M REDUCTION of shareholders' equity (the balance is unchanged at 2026-09-30 on the Q3 balance sheet), are 'not considered outstanding in the computation of EPS', and exist to fund employee benefit obligations. THIS MODEL KEEPS THE HOUSE CONVENTION (the diluted EPS count) — the opposite choice from TSLA, and the difference is the nature of the shares: Tesla's excluded block is compensation already issued to an outsider, while Lilly's is a treasury-like holding of the consolidated company against its own benefit obligations, and Lilly itself guides on this count (its 2026 EPS guidance 'assumes shares outstanding of approximately 894 million', Q3 release). Dividing by the issued census of 940.7M instead would print $798.94 — stated here and in the caveats, so the reader can take the other side of the call with the number in hand. |
| Market price | $1,412 | Delayed quote · as of 2026-11-10 05:11 UTC |
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