Eli Lilly and Company (LLY): A Bull Case Theory

We came across a bullish thesis on Eli Lilly and Company on Pebble Bites’s Substack by Christina Gan. In this article, we will summarize the bulls’ thesis on LLY. Eli Lilly and Company's share was trading at $1,075.47 as of November 28th. LLY’s trailing and forward P/E were 52.69 and 33.90, respectively according to Yahoo Finance.

Eli Lilly and Company discovers, develops, and markets human pharmaceuticals in the United States, Europe, China, Japan, and internationally. LLY presents a compelling BUY opportunity as a global leader addressing major health issues, including obesity and Alzheimer’s. The company’s weight loss drugs, Mounjaro and Zepbound, alongside late-stage pipeline assets like Donanemab, have demonstrated strong momentum, with Mounjaro sales up 68% YoY and Zepbound up 172%, yet the stock has fallen 18% YTD, creating a mispricing opportunity.

Lilly dominates the cardiometabolic health segment, which accounts for nearly 73% of revenue, with GLP-1 therapies driving structural shifts in obesity and diabetes treatment. Its oncology, immunology, and neuroscience franchises offer diversification, with Alzheimer’s drug Donanemab providing significant upside potential. Geographically, the U.S. represents 67% of revenues and benefits from new Medicare/Medicaid coverage for anti-obesity drugs, while Europe grows steadily and Asia presents high incremental potential despite regulatory hurdles.

The global anti-obesity drug market is projected to exceed $95B by 2030, fueled by rising obesity rates and chronic metabolic diseases. Lilly’s dual-mechanism drugs, backed by robust clinical data, offer superior efficacy versus competitors, including Novo Nordisk, while recent policy and regulatory changes strengthen pricing power and market control. Operationally, Lilly is highly profitable with gross margins above 80% and EBITDA margins at 46.5%, supported by a strong balance sheet and resilient cash flow. Recent stock volatility reflects short-term sentiment over pipeline developments rather than fundamentals.

Valuation using DCF analysis indicates a three-year price target of $1,317. Key risks include policy shifts, macroeconomic factors, and pipeline execution, but these are mitigated by scale, diversification, and strong R&D capabilities. Given industry tailwinds, pipeline strength, and mispricing, Lilly offers a high-conviction investment with exceptional growth potential.

Previously, we covered a bullish thesis on Eli Lilly and Company (LLY) by Kontra in May 2025, which highlighted the company’s leadership in obesity and diabetes therapeutics, strong GLP-1 sales, and robust pipeline development. The company's stock price has appreciated by approximately 35.43% since our coverage. This is because the thesis played out. Christina Gan shares a similar view but emphasizes updated valuation and Alzheimer’s pipeline growth.

Eli Lilly and Company is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 119 hedge fund portfolios held LLY at the end of the second quarter which was 119 in the previous quarter. While we acknowledge the potential of LLY as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.