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Should Investors Buy Eli Lilly's (LLY) Stock After Strong Q2 Results?

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Last Thursday we received impressive Q2 results from one of the largest pharmaceutical companies in Eli Lilly (LLY - Free Report) .  

The pharma giant said its growth trajectory accelerated during Q2 as its investments in advancing innovative medicine are focused on expanding manufacturing and bringing Lilly medicines to more people worldwide.

However, let’s see if it’s time to buy Eli Lilly’s stock which is up +15% since its Q2 report, to almost $900 a share.

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Eli Lilly’s Q2 Results

Led by MOUNJARO and ZEPBOUND, Eli Lilly’s type-2 diabetes and weight loss drug, the company stated its new product sales grew by nearly $3.5 billion compared to the same period last year. Overall, Eli Lilly’s Q2 sales spiked 35% to $11.3 billion and beat expectations of $9.82 billion by 15%.

More impressive, Q2 earnings of $3.92 per share soared 85% from EPS of $2.11 in the comparative quarter. This came in 48% above estimates of $2.64 a share with Eli Lilly now surpassing bottom-line expectations for five consecutive quarters.

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Guidance & Growth Trajectory 

Eli Lilly expects its momentum to accelerate throughout the rest of the year and raised its full-year revenue guidance for fiscal 2024 by $3 billion to be between $45.4-$46.6 billion. This came in above the current Zacks Consensus of $42.96 billion or 26% growth.

Based on Zacks estimates, Eli Lilly’s revenue is projected to climb another 23% in FY25 to $53.05 billion.

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Furthermore, annual earnings are now projected to skyrocket 122% this year to $14.02 per share versus EPS of $6.32 in 2023. Even better, FY25 EPS is slated to increase another 41%.

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Monitoring Eli Lilly’s Valuation

At current levels, Eli Lilly’s stock trades at 63.5X forward earnings. This is a noticeable premium to the S&P 500’s 22.5X and its Zacks Large Cap Pharmaceuticals Industry average of 19.4X with some noteworthy peers being Novo Nordisk (NVO - Free Report)  and AbbVie (ABBV - Free Report) .

That said, Eli Lilly has become a clear leader in its space and does trade below its five-year high of 93.6X forward earnings but above the median of 33X during this period.

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Bottom Line

After soaring over +70% year to date, Eli Lilly’s stock currently lands a Zacks Rank #3 (Hold). Still, a buy rating could be on the way as earnings estimate revisions are likely to trend higher in the coming weeks in correlation with Eli Lilly raising its revenue guidance which could also help to level the company’s valuation.


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Novo Nordisk A/S (NVO) - free report >>

Eli Lilly and Company (LLY) - free report >>

AbbVie Inc. (ABBV) - free report >>

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