Why Isn’t Eli Lilly Stock Trading At The Top Of Its Peer Group?
The market seems to have its pharma giants ranked in a peculiar order, leaving one of the group’s fastest-growing performers trading at a middle-of-the-pack multiple rather than the group high.
Eli Lilly (LLY) is delivering a blockbuster performance, powered by its dominant obesity and diabetes drugs. The stock has returned +80% over the last twelve months, and with shares trading around $1180.16, it’s a titan in the healthcare space. Yet when you line it up with its peers, a strange mismatch appears.
On a trailing GAAP basis, Merck trades at an optically elevated 105.7 times earnings—a figure distorted by recent acquisition-related charges and one-off items that compressed its net income—compared to Lilly’s 39.4 times earnings. Even on an adjusted operating basis, however, Lilly’s 50% top-line expansion contrasts sharply with Merck’s 4.6% growth, underscoring how differently the market is pricing the two trajectories.
This raises a sharp question for investors: is the market pricing in a future problem at Lilly, or has it simply misjudged the pecking order?
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How can the group’s fastest grower not be its priciest stock?
The numbers across the competitive group deepen the puzzle. Eli Lilly leads its peers on key performance metrics. Its 50% trailing twelve-month revenue growth and 50% operating margin both rank first in its competitive group. Compare that to Pfizer, whose revenue declined 0.2% over the same period with a 27% margin, or AbbVie, which grew revenue 10.4% with a 34% margin.
Despite this top-tier delivery, Lilly’s valuation sits in the middle of the pack. At 39.4 times earnings, Lilly sits roughly in the middle of its peer group—trading at a clear premium to value-oriented names like Amgen (25.6x), Johnson & Johnson (29.8x), and Pfizer (35.2x), yet well below the elevated multiples commanded by AbbVie (69.9x) and Merck (105.7x). Despite delivering group-leading 50% revenue growth, Lilly has not been awarded the cohort’s richest valuation.
| LLY | JNJ | MRK | PFE | ABBV | AMGN | |
|---|---|---|---|---|---|---|
| Market Cap ($ Bil) | 1,053.2 | 626.8 | 335.5 | 152.7 | 441.3 | 224.2 |
| PE Ratio | 39.4 | 29.8 | 105.7 | 35.2 | 69.9 | 25.6 |
| LTM Revenue Growth | 50% | 8.1% | 4.6% | -0.2% | 10.4% | 9.1% |
| LTM Operating Margin | 50% | 27% | 10.5% | 27% | 34% | 30% |
| 12M Stock Return | 80% | 53% | 70% | 13.9% | 28% | 48% |
Is the market right to worry about the next act?
The market’s caution isn’t baseless; it’s rooted in questions about the future. The growth engine is clear: the company’s Mounjaro and Zepbound drugs combined for $14.9 billion of revenue in the last quarter alone. The concern is whether this explosive pace is sustainable, especially as the company navigates pricing pressure and new product launches. Some analysts on the latest earnings call noted that the U.S. launch of Foundayo, Lilly’s new oral drug, has been “somewhat slower than anticipated.”
This focus on new oral options is critical for long-term growth. A recent analysis, for instance, explored how Lilly’s future depends on supplementing its current injections with a pill. The transition to new products and broader patient access, including through the new Medicare GLP-1 Bridge program, brings uncertainty about future net pricing and adoption rates. For investors in the healthcare sector, this dynamic is a familiar one, where today’s dominance must constantly be defended by tomorrow’s pipeline. Some may prefer a broader approach through an ETF like XLV, which holds a basket of major pharmaceutical companies.
What number will prove whether this growth is durable?
While the market is focused on potential pressures, management is signaling confidence. The company just raised its full-year revenue guidance, a clear statement about its near-term outlook. The debate over Lilly’s valuation will ultimately be settled by its ability to meet or exceed these heightened expectations, proving that its growth trajectory remains intact despite the pressures.
The single most important thing to watch, therefore, is that guidance. Management now expects full-year revenue to be between $85 billion and $87 billion. If Lilly can deliver at the high end of this range, it would directly challenge the narrative of a looming slowdown. Achieving the upper band of that range could provide support for the durability of its Cardiometabolic Health franchise, potentially prompting a re-evaluation of its multiple relative to peers.
To keep score on this group beyond today, our full peer-by-peer dashboards for LLY track the whole lineup, metric by metric.
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