Despite market concerns over high valuations and intensifying competition, Eli Lilly (LLY) continues to prove the doubters wrong. In the first quarter of this year, the pharmaceutical giant once again delivered strong results, injecting new vitality into its stock price. Following the release of its earnings report on April 30, Eli Lilly’s stock rose approximately 10%. However, the stock remains down 10% year-to-date. At the current price level, it is not too late to invest in this company. Here are three reasons.
In the first quarter, Eli Lilly reported revenue of $19.8 billion, a 56% increase year-over-year. Such a high revenue growth rate is extremely rare for a large pharmaceutical company, but it is not unfamiliar to Eli Lilly. Over the past few years, compared to peers of a similar scale, Eli Lilly’s sales have continued to grow at a remarkable pace.
Profit growth has been equally impressive. Eli Lilly’s adjusted earnings per share reached $8.55, a 156% increase from the same period last year. Unsurprisingly, its GLP-1 portfolio—including Mounjaro for diabetes and Zepbound for obesity—made the biggest contribution. Mounjaro sales surged 125% year-over-year to $8.7 billion, while Zepbound generated $4.2 billion in revenue, an 80% increase compared to the first quarter of 2025.
The good news is that Eli Lilly’s core business is expected to continue driving robust growth. In early April, the company received approval for Foundayo, an oral GLP-1 weight-loss drug it developed. This therapy is expanding Eli Lilly’s market. According to management, 80% of Foundayo users are new patients who had not previously used GLP-1 medications, possibly due to a dislike of injections, high monthly costs, or other factors. The addition of Foundayo will further enhance an already outstanding business.
On April 30, the U.S. Food and Drug Administration (FDA) proposed a recommendation to remove tirzepatide (the active ingredient in Mounjaro and Zepbound) from its list of drug components deemed to be in clinical need. In simple terms, when specific conditions are met (such as drug shortages or the ingredient being on this list), FDA-registered 503B outsourcing facilities can compound the drug on a large scale without a specific patient prescription.
Some telehealth companies have used this pathway to provide patients with compounded versions of tirzepatide at prices significantly lower than the brand-name drug. This has become a thorny issue for Eli Lilly, as an abundance of cheap compounded tirzepatide in the market has somewhat weakened the company’s pricing power. Eli Lilly has attempted to address this issue with limited success. If the FDA finalizes this proposal, it would once again boost the company’s GLP-1 business. Investors should closely monitor these developments.
Although Eli Lilly is primarily a GLP-1 company right now, it also has several products in other areas with rapidly growing sales. In the first quarter, revenue from its cancer therapy Jaypirca rose 79% year-over-year to $165 million. Sales of the eczema treatment Ebglyss, the Alzheimer’s drug Kisunla, and the ulcerative colitis medication Omvoh each more than doubled. Admittedly, these therapies currently account for a small portion of Eli Lilly’s total revenue, as GLP-1 products dominate.
However, the fact that Eli Lilly’s other pipeline products can also achieve annual sales exceeding $1 billion—with some analysts predicting all four of the aforementioned therapies could reach this level—is noteworthy. Eli Lilly is doubling down on its efforts. Over the past few years, the company has aggressively expanded its R&D pipeline through acquisitions. Looking ahead, Eli Lilly is poised to make significant clinical progress outside the GLP-1 space, which should help the company continue to perform well even as competition intensifies in its core therapeutic areas.
Eli Lilly’s stock is not cheap—its forward price-to-earnings (P/E) ratio is 28.5, compared to the healthcare sector average of 16.5. However, given its rapid revenue and profit growth, Eli Lilly warrants this premium. Investors who buy the stock now could still expect to see substantial returns over the next five years.
