Eli Lilly Stock Testing Price Floor – Buy Now?
Eli Lilly (LLY) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($772.85 – $854.21), levels from which it has bounced meaningfully before. In the last 10 years, Eli Lilly stock received buying interest at this level 3 times and subsequently went on to generate 20.2% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 5/15/2024 | 20.8% | 61 |
| 8/6/2024 | 21.2% | 24 |
| 1/24/2025 | 18.6% | 38 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For LLY Read Buy or Sell LLY Stock to see how convincing this buy opportunity might be.
Markets reward quality over time, and that’s what High Quality Portfolio captures.
Here are some quick data points for Eli Lilly that should help decision:
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- Revenue Growth: 36.8% LTM and 23.4% last 3 year average.
- Cash Generation: Nearly -0.09% free cash flow margin and 43.0% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for LLY was 1.5%.
- Valuation: LLY stock trades at a PE multiple of 52.9
- Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and better operating margins
For quick background, Eli Lilly provides innovative pharmaceuticals globally, including treatments for cancer, rheumatoid arthritis, and autoimmune diseases such as psoriasis and ankylosing spondylitis.
| LLY | S&P Median | |
|---|---|---|
| Sector | Health Care | – |
| Industry | Pharmaceuticals | – |
| PE Ratio | 52.9 | 23.6 |
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| LTM* Revenue Growth | 36.8% | 5.4% |
| 3Y Average Annual Revenue Growth | 23.4% | 5.3% |
| Min Annual Revenue Growth Last 3Y | 1.5% | -0.1% |
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| LTM* Operating Margin | 43.0% | 18.7% |
| 3Y Average Operating Margin | 35.6% | 18.0% |
| LTM* Free Cash Flow Margin | -0.1% | 13.1% |
*LTM: Last Twelve Months
What Is Stock-Specific Risk If The Market Crashes?
That said, Lilly isn’t immune to big drops. It fell 51% during the Global Financial Crisis and 43% in the Dot-Com bubble. Even in more recent turbulence, like the 2018 correction, inflation shock, and Covid pandemic, it still saw declines between 18% and 22%. So, despite strong fundamentals, this stock can take a noticeable hit when markets turn sour.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.