No signal change: HOLD / HOLD / HOLD holds at every horizon — but the story around it did move. Q2 2026 printed 5 Aug and it was a beat-and-raise: revenue $23.0bn, +48% YoY (vs the ~$20.7bn estimate), adjusted EPS $8.38 (vs ~$8.05 est), Mounjaro +91% to $9.9bn and Zepbound US +44%; management lifted the FY26 revenue guide to $85-87bn (from $82-85bn) and set adjusted EPS at $35.50-36.50 (floor held, ceiling trimmed from $37.00). The stock is +7.1% to $1,191.94. Yet the valuation verdict is unchanged: the higher price out-ran the guidance raise, so the actual/warranted ratio widened 1.44× → ~1.50× — still Expensive, double-confirmed against the 22× Health-Care floor. The Valuation Ceiling gate continues to cap all three horizons at Hold.
Eli Lilly and Company is one of the world's largest pharmaceutical firms, founded in 1876 and headquartered in Indianapolis. Its economics are now dominated by the incretin (GLP-1) franchise — tirzepatide, sold as Mounjaro for type-2 diabetes and Zepbound for obesity — which sits alongside a deep portfolio in diabetes (Jardiance, Trulicity), oncology (Verzenio), immunology (Taltz, Olumiant) and neuroscience (Kisunla for Alzheimer's). What sets Lilly apart is the combination of the highest-growth product cycle in large-cap pharma with an unusually durable, long-dated patent estate and a first-mover lead in oral GLP-1 via orforglipron (branded Foundayo). For a reader, think of it as the branded-drug leader of the obesity/diabetes super-cycle: enormous, highly profitable, growing revenue faster than 45% year-on-year, but priced by the market as a premium compounder.
Lifecycle & sector: Health Care / Drug Manufacturers — General, classified Mature-but-accelerating large-cap pharma. Revenue is compounding at large-growth rates — Q2 2026 revenue $22.97bn, +48% YoY, driven by Mounjaro (+91% to $9.9bn) and Zepbound (US +44% to $4.9bn) — so we score it on the pharma profile (R&D efficiency, patent-cliff exposure, pipeline depth, ROIC) with growth-stage emphasis on the top line.
| Sub-signal | Value | Read | Score |
|---|---|---|---|
| Revenue trajectory | +48% YoY (Q2'26 $22.97bn); FY26 guide RAISED to $85-87bn (from $82-85bn) | Best-in-class growth for a $1tn-cap pharma; guide-up confirms the ramp | 96 |
| Profitability vs peers | Q2 gross margin 85.8%, operating margin 39.1%; TTM net margin 33.5%; adj EPS $8.38 (+33% YoY) | Top-decile pharma margins | 90 |
| Cash generation | TTM FCF ~$11.1bn; FCF/share ~$22.5; heavy capacity capex still a drag on conversion | Real and improving, but conversion suppressed by plant build-out | 64 |
| Balance-sheet health | Net debt ~$46bn / EBITDA ~$32bn ~1.3×; interest cover ~36×; current 1.35 | Investment-grade, comfortably serviced | 80 |
| R&D efficiency / pipeline | Orforglipron (oral GLP-1, launched), retatrutide (next-gen tri-agonist), Kisunla, lepodisiran | Deepest incretin pipeline in the industry | 90 |
Branded incretins price well, but MFN/Medicare policy caps the ceiling
N/A for pharma (neutral)
Scripts move on efficacy/access/price — patient stickiness is moderate
Vast manufacturing scale-up; a supply, not cost, war
Deep, long-dated patent estate + brand — the core moat
Moat = average ≈ 69/100. The wall is the patent estate; switching costs and cost advantage are trimmed by the live two-horse race below.
| Rival | Threat | Share trajectory | Moat-erosion vector |
|---|---|---|---|
| Novo Nordisk (semaglutide — Wegovy/Ozempic, oral sema) | Direct #1 rival | Lilly gaining — Q2 tirzepatide (Mounjaro +91% YoY) outgrew semaglutide; oral-GLP-1 lead via orforglipron/Foundayo | Oral-semaglutide access/price pressure on the oral segment |
| Amgen (MariTide, monthly injectable) | Next-gen entrant | Pre-launch; mixed Phase 2/3 tolerability | Convenience (monthly dosing) if data holds |
| Viking Therapeutics (VK2735, oral + injectable) | Emerging biotech | Phase 3; takeout candidate | Fast-follower efficacy in a widening TAM |
| Roche (CT-388 / Carmot assets) | Deep-pocketed late entrant | Early clinical | Capital + commercial reach over a multi-year horizon |
→ Net effect on the moat: Switching Costs trimmed to 55, Cost Advantage to 62 (a supply-and-access race, not a monopoly). Intangibles (patents) carry the score. Competitive threat level: elevated — propagated to the §11 Bear trigger and the §12 thesis-invalidation rule.
ROIC sits in the top decile of pharma (est. ~30%+; FMP ROE/ROA sub-scores both a maximal 5/5). Capital allocation is disciplined-aggressive: heavy reinvestment into manufacturing capacity plus a steady bolt-on M&A cadence — the IPR&D charges depress reported EPS but are the right long-run use of cash. The dividend was raised to $1.73/quarter ($6.92 annualised, ~0.6% yield, payout ~22%) and the diluted share count is edging down on buybacks. Quality score: 85/100.
Lilly is an elite business at an Expensive price — the pillar the anchor exists to keep honest. The Q2 beat-and-raise lifted the earnings power, but the price rose faster, so the name stays firmly in the Expensive band. We score the actual multiple against a computed warranted multiple, not against Lilly's own (rich) history.
| Lens | Value | Read |
|---|---|---|
| Warranted-multiple anchor (40%) | 1.50× warranted | Expensive |
| Sector median P/E (20%) | ~33× fwd vs pharma ~16-18× | Well above the group |
| Own-history decile (15%) | Back near the upper end of the 5-yr band after the print | Rich vs own history |
| PEG (10%) | clean PEG ~1.35 (33× on ~25% adj growth) | Fair-to-full on growth — growth is real, but priced |
| Analyst consensus (15%) | Price ~12% below $1,336 consensus / $1,350 median | Street sees upside — the one bullish cross-check |
FCF yield (universal anchor): ~$11.1bn FCF / ~$1.11tn EV ≈ 1.0% — ~1%, i.e. very expensive on cash; the buyer is paying for future growth, and capacity capex is still suppressing FCF.
Reverse-DCF read: at $1,192 the market embeds ~13-15% durable long-run EPS growth; our disciplined estimate is ~10% — the price already assumes Lilly executes near-flawlessly. That gap is why the pillar is Expensive even before the print, and it widened slightly on the +7% move.
Analyst cross-check: consensus target $1,336.18 (high $1,500 / median $1,350 / low $1,135), ~12% above spot; grades 33 Buy / 9 Hold / 3 Sell (73% bullish, "Buy" consensus), all recent actions maintains; FMP health rating B (ROE/ROA 5/5, but P/E and P/B sub-scores 1/1 — the rating agrees the returns are elite and the price is steep). The anchor is supreme: these relative lenses order the name within Expensive; they cannot lift it out. Valuation score: 37/100.
Primary driver: the GLP-1 / obesity & diabetes super-cycle, with US drug-pricing policy (IRA / MFN) as the offsetting secondary driver. Lilly's revenue trajectory is levered almost entirely to how fast the incretin market expands and how much of it Lilly keeps — and Q2 gave a fresh, hard data point that both are running in Lilly's favour.
| Horizon | Read | Assessment |
|---|---|---|
| Historical (25%) | Tirzepatide from launch to a ~$40bn annualised run-rate (Mounjaro +91% in Q2); oral GLP-1 market ~35% CAGR to 2035 | Powerful, sustained tailwind |
| Current (50%) | Orforglipron launched and leading the oral segment; FY26 revenue guide raised to $85-87bn; Q2 Mounjaro +91% (tirzepatide outgrowing semaglutide); duopoly ~87% of revenue | Tailwind — Lilly gaining share; policy overhang the only brake |
| Forward (25%) | Retatrutide behind it; label/geographic expansion; offset by MFN + Medicare negotiation risk | Structurally positive, policy-capped |
Driver score: 80/100 — Strong Tailwind, eligible to amplify a BUY to STRONG BUY. It does not here: the base signal is HOLD (Valuation Ceiling), and HOLD never amplifies. Thesis-invalidation floor: the case breaks if a rival takes durable tirzepatide/oral share, or if MFN/Medicare pricing materially compresses US incretin economics.
The 30 Jul Macro-Economic report (still the newest) has Health Care (XLV) at N / N / O (Neutral short & medium, Outperform long) under a "stagflation-lite" regime. Pharma is defensive and low macro-sensitivity, so the economy is neither a clear tailwind nor a headwind here — pressure Neutral. That leaves the base signal unchanged (a Neutral pressure enables no amplification). The one macro tail that is armed — the S&P-500 AI-concentration unwind — does not apply to Lilly: its earnings are clean (not non-operating-inflated) and it is not in the AI cohort, so it inherits no cohort de-rating leg.
Source: sector-map (XLV) · Macro report 2026-07-30
The Q2 beat flipped the tape. Where the daily and intraday charts were rolling over into the print a week ago, price has now gapped back above the 50-day and every timeframe is pointing up — confluence is strongly bullish. The caveat is that you would be entering ~7% higher, near the top of the range, after the move.
| Sub-signal | Read | Score |
|---|---|---|
| MTF trend confluence | All five timeframes up (monthly RSI 66, weekly 63, daily strong-uptrend RSI 55); daily MACD histogram still slightly negative (lagging the gap) | 75 |
| Risk-reward / position-risk | Price $1,192; nearest support $1,134/$1,109, 200-DMA $1,031; a logical stop ~$1,105 is ~7% (≈2 ATR) below — a wide stop this extended | 48 |
| Relative strength | +7% in a week, recovered the ~11% drawdown; now out-performing SPY and XLV short-term | 62 |
| Macro overlay (low sensitivity, 10%) | Pharma is macro-defensive; XLV short-signal Neutral | 50 |
| Sentiment (analyst grades + news) | Beat-and-raise; targets rising ($1,336 consensus); all grades "maintain" Buy; Novo stumble a relative positive | 66 |
| Catalysts (Q2 now behind) | The binding event is resolved (positive); next catalyst is Q3 on 29 Oct — a calm ~11-week calendar | 68 |
Timing score: 64/100 — bullish confluence, extended. With the Earnings Event Risk gate cleared, timing confidence rises to 65% (from 40%). The signal still does not turn on timing — the Valuation Ceiling caps it — but the near-term tape is now a tailwind, not a headwind.
| Date | Event | Impact | Forecast | Previous | Relevant? | Why |
|---|---|---|---|---|---|---|
| 2026-08-12 | US CPI / Core CPI (Jul) | High | CPI 3.4% YoY · Core 2.5% | 3.5% / 2.6% | Low | Pharma is low macro-sensitivity; matters only via broad rates |
| 2026-08-19 | FOMC Minutes | High | — | — | Low | Rate-path colour; indirect for defensive pharma |
| 2026-10-29 | LLY Q3 2026 earnings (company event) | High | EPS est ~$9.48 · Rev est ~$22.0bn | — | Yes | The next binding catalyst — incretin revenue, oral-script ramp, guidance |
| Date | Event | Actual | Forecast | Surprise | Impact |
|---|---|---|---|---|---|
| 2026-08-05 | LLY Q2 2026 earnings | Rev $23.0bn · adj EPS $8.38 | $20.7bn · ~$8.05 | Big beat + guide raised | Confirmed the franchise; muted +1.9% print-day reaction after a +4.9% run the day before |
| 2026-08-03 | ISM Manufacturing PMI (Jul) | 55.6 | 54.0 | Above | Broad-market; immaterial for defensive pharma |
The event that mattered has passed: Q2 printed 5 Aug and it was a beat-and-raise (revenue $23.0bn, +48% YoY, well ahead of the ~$20.7bn estimate; FY revenue guide lifted to $85-87bn). Lilly is low macro-sensitivity, so the CPI/FOMC-minutes cluster over the next fortnight is background noise for this name. There is no company-specific dated catalyst before Q3 on 29 Oct, so the report reverts to a standard two-week refresh cadence.
| Timeframe | Trend | Direction | RSI | MACD | Key S/R | Breakout | Vol |
|---|---|---|---|---|---|---|---|
| Monthly | Uptrend ↑ | Bullish | 66 | +, rising | S: 973 · R: 1134 | Resistance breakout | 0.23× |
| Weekly | Uptrend ↑ | Bullish | 63 | +, rising | S: 977 · R: 1249 | Resistance breakout | 1.15× |
| Daily | Strong up ↑ | Bullish | 55 | −, lagging (basing up) | S: 1109/1079 · R: 1189/1232 | Resistance breakout | 1.27× |
| Hourly | Uptrend ↑ | Bullish | 64 | +, flat | S: 1170 · R: 1231 | Resistance breakout | — |
| 15-min | Strong up ↑ | Bullish | 64 | +, flat | S: 1174 · R: 1231 | Resistance breakout | — |
| Confluence: Strongly bullish · MTF Score 75 | |||||||
A clean reversal from a week ago. The secular (monthly/weekly) uptrend was never in doubt — price is far above the rising longer-term averages — and the tactical picture has now caught up: after the 5 Aug beat the daily gapped back above its 20- and 50-day averages (SMA50 ~$1,155) into a strong uptrend, and both intraday frames are firmly up. The one lagging tell is the daily MACD histogram, still marginally negative as it works off the pre-print dip. This is a resumed uptrend, not a fresh base — the trade-off is that an entry here is extended (~$1,192 vs the $1,109-1,134 support shelf). Line in the sand remains the 200-DMA (~$1,031).
6-month daily close with trailing SMA50. After fading ~11% off the $1,249 ATH into the Q2 print, LLY gapped back up on the 5 Aug beat-and-raise to ~$1,192, reclaiming the 50-day; the 200-DMA (~$1,031) is the line in the sand.
The tirzepatide + orforglipron ramp keeps beating and Lilly delivers another raise at Q3; oral-GLP-1 scripts surprise to the upside and the drug-pricing overhang stays contained. The multiple holds ~33× on higher forward EPS. ~+26% from spot — roughly the analyst high.
The franchise keeps compounding into the raised guide, but the rich multiple caps re-rating; the stock converges toward the ~$1,340-1,350 analyst consensus/median over 12 months as EPS grows into the price. ~+12%.
A pricing headline (MFN/Medicare), an oral-launch friction, or a demand/inventory wobble meets an Expensive multiple — compression toward ~25× FY26 adjusted EPS. Competitive trigger: Novo's oral semaglutide or a next-gen entrant (Amgen/Viking) takes durable share. ~-16%, toward the $1,135 analyst low and below.
Probability-weighted fair value ≈ 0.25×1,500 + 0.55×1,340 + 0.20×1,000 = ~$1,312 — ~10% above spot, but the constraint is the multiple, not the business. With the print resolved, the distribution is narrower than a week ago; the reason the signal still waits is valuation discipline, not event risk.
Forecast: Fundamental: requires a pullback into ~$1,109-1,134 — reachable on a normal give-back of the post-print gap or a broad de-rate; not present at $1,192. Technical: the 50-day is already reclaimed; the missing pieces are a >1.5×-volume confirmation or a positive-turning MACD, both a few sessions away if the uptrend holds — OR a tested bounce off the $1,109-1,134 shelf, which is the higher-quality entry. Catalyst: the Q2 window has closed; the next clean catalyst path is Q3 on 29 Oct. Overall: WAIT — the print is in and it was good, but the honest move on a name capped at HOLD by valuation is to accumulate on a pullback into support rather than chase a +7% gap.
Forecast: No exit rule is live. The stop ($1,105) is ~7% below spot, at the top of the pre-print range; a break would most plausibly require a pricing headline or a demand scare, neither of which is present. This is a HOLD, not a position to exit — there is nothing mechanical to act on, and the profit-target (~$1,340) is ~12% away.
What you're risking: a give-back to the $1,105 stop (-7%) and, if a pricing or competition headline lands, the bear path to ~$1,000 (-16%) as an Expensive multiple compresses. Two of three entry conditions are unmet — you'd be buying above the fair-value entry zone and before the MACD/volume confirm — i.e. paying up at the top of the range.
What you're gaining: immediate participation in a best-in-class compounder whose Q2 just beat and raised — base upside to ~$1,340 (+12%) and bull to ~$1,500 (+26%), plus the retatrutide/CNS optionality you'd own for free. But the FCF yield (~1%) pays you almost nothing to wait.
Read: the print de-risked the story, but valuation still caps this at HOLD. Waiting for a pullback into $1,109-1,134 (or a volume-confirmed continuation) materially improves the deal versus chasing here.
What you're giving up: the base-case climb to ~$1,340 (+12%), the compounding of a ~48%-revenue-grower, and the pipeline optionality — and you'd be selling below probability-weighted fair value (~$1,312).
What you're protecting: capital if a pricing/competition shock hits (bear -16%). But no mechanical exit is live — stop clear, thesis intact (Q2 confirmed it), profit-target not hit. Selling here is a valuation-discipline call, not a rules call.
Read: for a holder this is a hold — trim only into strength toward $1,340-1,350. For a non-holder it is a wait for a pullback, not a short.
Position sizing not computed — no risk budget or portfolio role was specified for this batch refresh. For context only: beta ~0.51 (LLY is low-beta vs the market), daily ATR ~$42.8 (~3.6% of price), and the stock just recovered an ~11% drawdown in a single week. The §12 Conviction Ladder reads Wait (0 of 3 entry paths cleanly open at $1,192), so the sizing guidance is simply: let price come back into the $1,109-1,134 support shelf, or wait for a volume-confirmed continuation, before committing capital to an Expensive name.
{
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"date": "2026-08-07",
"version": "v6",
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"company": "Eli Lilly and Company",
"currency": "USD",
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"sector": "Health Care",
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"quality_score": 85,
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},
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},
"timing_detail": {
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"risk_reward_score": 48,
"relative_strength_vs_spy": 4.0,
"relative_strength_vs_sector": 3.0,
"catalyst_clustering_score": 68,
"dynamic_macro_weight": 0.1
},
"economic_alignment_stance": "Neutral",
"economic_alignment_conviction": 55,
"economic_alignment_pressure": "Neutral",
"economic_alignment_source": "sector-map",
"macro_report_date": "2026-07-30",
"economic_alignment_sector": "Healthcare (XLV) s=N / m=N / l=O",
"overall_confidence": 62,
"val_band": "expensive",
"warranted_multiple": 22,
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"val_multiple_basis": "clean forward FY26 adjusted P/E ~33.1x ($1,191.94 / ~$36.00 raised adj-EPS guide midpoint); TTM reported 40x (IPR&D-depressed)",
"discount_rate_r": 9.13,
"risk_free_10y": 4.63,
"g_near": 10,
"g_term": 3,
"clean_pe": 33.1,
"clean_peg": 1.35,
"nonop_pct_of_net_income": 3,
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"moat_score": 69,
"roic_percentile_vs_peers": 92,
"industry_benchmark_name": "R&D Efficiency + Patent-Cliff Exposure (pharma)",
"industry_benchmark_score": 88,
"competitive_share_trajectory": "gaining",
"competitive_threat_level": "elevated",
"fair_value_est": 1130,
"stop_loss": 1105,
"target_price": 1340,
"scenario_base_target": 1340,
"scenario_bull_target": 1500,
"scenario_bear_target": 1000,
"entry_groups_met": 0,
"entry_conviction": "Wait",
"exit_groups_live": 0,
"exit_action": "Hold",
"short_entry_confirmed": false,
"hard_gate_state": "caution",
"gates_triggered": [
"Valuation Ceiling"
],
"gates_caution": [
"US drug-pricing (MFN/Medicare) overhang",
"Elevated GLP-1 competition (Novo oral semaglutide)"
],
"do_not_buy_triggers": [],
"analyst_consensus_target": 1336.18,
"analyst_target_high": 1500,
"analyst_target_low": 1135,
"analyst_target_median": 1350,
"analyst_target_upside_pct": 12.1,
"analyst_grades_consensus": "Buy",
"analyst_bullish_pct": 73.3,
"analyst_coverage_count": 45,
"recent_upgrades_30d": 0,
"recent_downgrades_30d": 0,
"fmp_rating": "B",
"fmp_overall_score": 3,
"next_update_date": "2026-08-21",
"next_update_basis": "default +14d (no impactful event before Q3 earnings 29 Oct)",
"prior_report": "calibration-LLY-20260804-1315.json",
"prior_primary": "HOLD",
"changes_note": "HOLD/HOLD/HOLD held. Q2 2026 (5 Aug) was a beat-and-raise: rev $23.0bn +48% YoY (vs ~$20.7bn est), adj EPS $8.38 (vs ~$8.05 est), Mounjaro +91% to $9.9bn, Zepbound US +44%; FY26 rev guide lifted to $85-87bn, adj EPS guide $35.50-36.50 (floor held, ceiling trimmed from $37.00). Price +7.1% to $1,191.94. Earnings Event Risk gate CLEARED -> overall confidence 40->62. Timing 53->64 (MTF flipped bearish->strongly bullish). Valuation still Expensive: 10-Y 4.75->4.63 (warranted ~22x held); actual fwd P/E ~33x -> ratio 1.44->1.50 (higher price out-ran the EPS raise) -> Valuation Ceiling still binds. Analyst consensus target $1,315->$1,336 (median $1,350). Entry Wait; next update 21 Aug (Q3 29 Oct)."
}
HOLD across all three horizons, unchanged from 4 Aug. The signal is set by the Valuation Ceiling gate (Expensive, ~1.50× warranted) — a great business at a rich price. What changed is the character: Q2 (5 Aug) was a beat-and-raise, so the Earnings Event Risk gate cleared and the tape flipped from bearish to strongly bullish; the price is +7% and the name is, if anything, marginally more expensive. Next refresh 21 Aug on the standard two-week cadence (Q3 earnings 29 Oct).