Eli Lilly Stock (LLY) Strong Growth and Good Value in Q1 2025

Eli Lilly & Co. (NYSE: LLY) continues to solidify its position as a leading pharmaceutical company, demonstrating robust financial performance in Q1 2025. Despite recent market fluctuations, the company's strong fundamentals and strategic initiatives suggest a promising outlook for investors. In this article we will dive into Eli Lylly recent earnings, stock performance, growth potential, and the risks investors should consider.​

About Eli Lilly

Founded in 1876 by Colonel Eli Lilly, the company has evolved into a global pharmaceutical powerhouse headquartered in Indianapolis, Indiana. With a presence in approximately 125 countries and a workforce of 47,000 employees, Eli Lilly focuses on developing innovative medicines across various therapeutic areas, including diabetes, oncology, immunology, and neuroscience. Notable products include Mounjaro, Zepbound, Trulicity, and Verzenio.

Eli Lilly Financial Performance

In Q1 2025, Eli Lilly reported revenue of $12.73 billion, marking a 45.17% increase from $8.77 billion in Q1 2024. Earnings per share (EPS) rose by 23.39% to $3.06, up from $2.48 in the same quarter last year. On a trailing twelve-month (TTM) basis, revenue reached $49 billion, a 36.38% increase year-over-year, while EPS surged by 80.99% to $12.29. Free cash flow per share improved significantly to $4.14 from a negative $0.10, reflecting enhanced operational efficiency.

The company's profitability metrics remain strong, with a gross profit margin of 81.7% and a net profit margin of 22.66%. Return on assets stands at 16.45%, and return on equity is an impressive 77.28%, indicating effective utilization of assets and shareholder equity. However, the debt-to-equity ratio is 2.44, suggesting a higher reliance on debt financing.

Over the past five years, Eli Lilly's revenue has been growing steadily at a 17.7% CAGR, and net income at a 14.7% CAGR, while free cash flow has fluctuated.

Eli Lilly 2025 Financial Forecast

Analysts forecast revenue for 2025 to be $59.48 billion, a 32.04% increase from 2024's $45.04 billion. The projected non-GAAP EPS for 2025 is $21.99, representing a 69.25% rise from $12.99 in 2024. The consensus price target is $1,005.05 with Strong Buy rating, indicating a potential upside of 22.03% from current levels, with a strong buy rating from analysts.

LLY Stock Price Performance and Valuation

As of May 3, 2025, Eli Lilly's stock price stands at $823.62 per share. Over the past year, the stock has increased by 8.9%, underperforming the S&P 500's 12.2% gain. However, over a five-year period, LLY has delivered a remarkable 436.5% return, significantly outperforming the S&P 500's 93.8% increase.

The stock offers a dividend yield of 0.73%. Valuation metrics include a TTM price-to-sales (P/S) ratio of 15.13 and a forward P/S of 12.43. The TTM price-to-earnings (P/E) ratio is 67.02, with a forward P/E of 38.66. The price-to-free cash flow (P/FCF) TTM ratio is 197.88.

If we look at the valuation over the past five years, Eli Lilly's forward P/S is now trading above the average of 10.35. However, based on the forward P/E, the stock does not appear overvalued, as it is still below the five-year average of 39.08. While these valuations are relatively high, they reflect the company's strong growth prospects and market leadership in key therapeutic areas.

Eli Lilly Growth Potential

Eli Lilly's growth trajectory is supported by its robust pipeline and strategic investments.

• Product Portfolio Driving Growth
  Eli Lilly’s Q1 2025 revenue growth driven by blockbuster sales of Mounjaro for diabetes ($3.84 billion, up 113%) and Zepbound for obesity ($2.31 billion), both showing strong adoption in the U.S. and internationally. Zepbound quickly became the leader in the branded anti-obesity market, with over 60% of total and 74% of new U.S. prescriptions. Verzenio, a cancer therapy, also grew 10% to $1.16 billion, while other key products like Ebglyss, Jaypirca, Kisunla, and Omvoh collectively reached $7.52 billion, highlighting portfolio diversification. This broad-based growth across multiple therapies underscores Eli Lilly’s strong commercial execution and expanding global presence.
• Strong Market Position
  Eli Lilly has achieved market leadership in the U.S. incretin analogs market, holding a 53.3% share compared to Novo Nordisk’s 46.1%, and has increased its share by 5 percentage points from the previous quarter. The overall incretin analog market is expanding rapidly, with total prescriptions up 46% year-over-year, providing substantial growth opportunities for Lilly’s products. The company’s competitive position is further strengthened by securing key formulary access, such as Omvoh’s first-line coverage at major U.S. pharmacy benefit managers. Additionally, Pfizer’s exit from obesity drug development may further solidify Eli Lilly’s dominance alongside Novo Nordisk in this high-growth therapeutic area.
• Strategic Investments and Expansion Initiatives
  Eli Lilly is making a historic investment of over $50 billion in U.S. manufacturing, including $27 billion for four new plants, to address supply constraints and meet growing demand for its blockbuster drugs like Zepbound and Mounjaro. Three of these new sites will produce active pharmaceutical ingredients, while the fourth will expand capacity for injectable medicines, supporting both current and future therapies. In parallel, the company increased its R&D spending by 8% to $2.73 billion in Q1 2025, reinforcing its commitment to pipeline innovation and long-term growth. Eli Lilly also strengthened its oncology portfolio by acquiring Scorpion Therapeutics inhibitor program, further diversifying its future therapeutic potential.
• Pipeline Developments and Future Growth Catalysts
  Eli Lilly’s oral GLP-1 receptor agonist, orforglipron, achieved positive Phase 3 results in the ACHIEVE-1 trial, showing significant reductions in HbA1c (by 1.3% to 1.6%) and body weight (average loss of 16 lbs or 7.9%) compared to placebo, with a safety profile consistent with injectable GLP-1 therapies. As the first oral small molecule GLP-1 to complete a successful Phase 3 trial, orforglipron could greatly expand access to GLP-1 therapies and is expected to be submitted for regulatory approval for weight management by the end of 2025 and for type 2 diabetes in 2026. The acquisition of Scorpion Therapeutics further strengthens Lilly’s oncology pipeline, despite a $1.57 billion IPR&D charge that temporarily impacted earnings. Overall, Lilly’s Q1 2025 strategy balances investment in future growth catalysts with returns to shareholders, supporting both innovation and long-term profitability.

Risks to Consider

While Eli Lilly exhibits strong fundamentals, investors should be aware of potential risks.

• Execution Risks and Supply Constraints
  Eli Lilly is undertaking its most ambitious manufacturing expansion to date, aiming to increase production of GLP-1 drugs Mounjaro and Zepbound by at least 50% in H2 2025 compared to last year. The company has seven manufacturing sites ramping up or under construction. However, delays, cost overruns, or operational challenges in scaling this capacity could constrain supply, limit sales growth, and pressure margins. The current shortage of these drugs in the U.S. has already caused Lilly to miss some sales targets, illustrating the critical nature of execution on supply chain expansion.
• Regulatory and Approval Risks
  Eli Lilly’s future growth depends heavily on pipeline products like orforglipron (oral GLP-1) and lepodisiran (lipoprotein(a) lowering). While orforglipron’s Phase 3 results are promising, regulatory approvals are subject to uncertainties, including trial outcomes, safety profiles, and timing. Delays or setbacks could postpone market entry and revenue contributions. Similarly, lepodisiran faces lengthy trial timelines, adding to the risk that expected pipeline catalysts may not materialize as planned.
• Competitive Pressure in Obesity Drug Market
  The obesity and diabetes drug markets are intensely competitive. Novo Nordisk’s Wegovy (semaglutide) is a key rival to Lilly’s Zepbound. Recently, CVS Caremark, the largest U.S. pharmacy benefit manager, designated Wegovy as preferred on its formularies starting July 2025, potentially limiting coverage and accessibility for Zepbound. This move could impact Lilly’s market share and sales momentum. Maintaining leadership requires continuous innovation, competitive pricing, and strong payer relationships.
• Pricing and Political Pressure
  High prices for GLP-1 drugs like Zepbound price around $1,059/month face increasing scrutiny from U.S. policymakers and the public. Pressure to reduce drug prices or expand insurance coverage (for example, Medicare currently does not cover weight loss drugs) could compress margins or limit patient access. While Lilly expects Medicare to cover obesity treatments if FDA approves new indications, pricing reforms or reimbursement restrictions remain a risk to profitability.

Despite these risks, Eli Lilly's diversified portfolio, strong pipeline, and strategic initiatives provide a solid foundation for long-term growth.

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Conclusion

Eli Lilly's Q1 2025 performance underscores its strong growth trajectory and solidifies its position as a leading pharmaceutical company. The company's robust financials, innovative pipeline, and strategic investments suggest a promising outlook. While certain risks exist, the overall fundamentals and growth prospects make LLY an attractive option for investors seeking exposure to the healthcare sector.