Value
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.7 |
| P/S | 0.1 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 4.3 |
| PEG | 5.7 |
| Analyst target | 4.0 |
- ▸Forward P/E: 28.4x
- ▸PEG: 1.32
LLY · Why this verdict
Why Eli Lilly and (LLY) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictHOLD
Overall score6.2/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Eli Lilly is a high-quality healthcare franchise with 56% revenue growth, a wide economic moat, and four consecutive double-digit earnings beats, but the stock has effectively reached the analyst consensus price target with only 0.9% headroom remaining — the setup favors accumulation on weakness rather than initiating at current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business carries a wide economic moat with 35% net margins and a Rule of 40 score of 68 — an exceptional combination that distinguishes the franchise within healthcare and justifies a structural valuation premium over peers. Quality breakdown | Net margin stays above 30% and the Rule of 40 remains above 55 over the next 4 quarters, confirming that profitability and growth continue to reinforce each other. | →Stable |
| CounterFree cash flow is converting at only 36% of net income — a flagged quality concern — and the balance sheet carries a debt-to-equity ratio of 1.4; if earnings growth moderates and FCF does not recover, the current premium multiple may face downward pressure. | ||
The company has beaten consensus estimates in each of the past 4 quarters, averaging roughly 14.5% upside to expectations, with the most recent quarter delivering 16.9% above the estimate. This consistent pattern of under-promising and over-delivering supports the premium multiple even at elevated price levels. Earnings | Average EPS surprise remains above 10% over the next 4 quarters with no misses, sustaining the positive earnings revision cycle. | →Stable |
| CounterWith analyst targets already reached and only 0.9% headroom remaining to the take-profit level, continued beat delivery may already be fully discounted, leaving limited room for additional multiple expansion from current prices. | ||
Revenue has grown 56% year over year, well above the typical rate for a large-cap pharmaceutical company, supporting premium multiple sustainability if this trajectory continues to outpace consensus expectations. Growth breakdown | Revenue growth stays above 30% year over year for the next 2 reported quarters, sustaining the exceptional growth narrative. | →Stable |
| CounterThe leverage on the balance sheet (debt-to-equity at 1.4) represents a financial constraint that could limit reinvestment capacity if growth moderates; higher debt service may reduce flexibility at the moment it is most needed. | ||
With the stock sitting just below its analyst consensus price target — approximately 0.9% of headroom remaining to the take-profit level — the near-term reward is thin even as the risk/reward structure remains favorable at roughly 2.9-to-1. The setup favors patience over initiating new exposure at these levels. Warnings | A pullback toward the 50-day moving average entry zone restores a more attractive risk/reward profile for incremental positions. | ↑Improving |
| CounterA wide-moat franchise growing at 56% year over year can sustain and extend premium valuations; if analysts raise their consensus targets on continued beat delivery, the apparent ceiling resets and the current price becomes a compelling entry in retrospect. | ||
The business carries a wide economic moat with 35% net margins and a Rule of 40 score of 68 — an exceptional combination that distinguishes the franchise within healthcare and justifies a structural valuation premium over peers.
→StableQuality breakdown
- Expectation
- Net margin stays above 30% and the Rule of 40 remains above 55 over the next 4 quarters, confirming that profitability and growth continue to reinforce each other.
CounterFree cash flow is converting at only 36% of net income — a flagged quality concern — and the balance sheet carries a debt-to-equity ratio of 1.4; if earnings growth moderates and FCF does not recover, the current premium multiple may face downward pressure.
The company has beaten consensus estimates in each of the past 4 quarters, averaging roughly 14.5% upside to expectations, with the most recent quarter delivering 16.9% above the estimate. This consistent pattern of under-promising and over-delivering supports the premium multiple even at elevated price levels.
→StableEarnings
- Expectation
- Average EPS surprise remains above 10% over the next 4 quarters with no misses, sustaining the positive earnings revision cycle.
CounterWith analyst targets already reached and only 0.9% headroom remaining to the take-profit level, continued beat delivery may already be fully discounted, leaving limited room for additional multiple expansion from current prices.
Revenue has grown 56% year over year, well above the typical rate for a large-cap pharmaceutical company, supporting premium multiple sustainability if this trajectory continues to outpace consensus expectations.
→StableGrowth breakdown
- Expectation
- Revenue growth stays above 30% year over year for the next 2 reported quarters, sustaining the exceptional growth narrative.
CounterThe leverage on the balance sheet (debt-to-equity at 1.4) represents a financial constraint that could limit reinvestment capacity if growth moderates; higher debt service may reduce flexibility at the moment it is most needed.
With the stock sitting just below its analyst consensus price target — approximately 0.9% of headroom remaining to the take-profit level — the near-term reward is thin even as the risk/reward structure remains favorable at roughly 2.9-to-1. The setup favors patience over initiating new exposure at these levels.
↑ImprovingWarnings
- Expectation
- A pullback toward the 50-day moving average entry zone restores a more attractive risk/reward profile for incremental positions.
CounterA wide-moat franchise growing at 56% year over year can sustain and extend premium valuations; if analysts raise their consensus targets on continued beat delivery, the apparent ceiling resets and the current price becomes a compelling entry in retrospect.
Per-dimension breakdown
Quality
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 5.2 |
| FCF quality | 2.7 |
| Moat | 7.5 |
| Rule of 40 | 8.2 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 86%
- ▸Strong margins: 32%
- ▸Earnings quality RED FLAG: 34% FCF/NI
- ▸Wide economic moat
Growth
7.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 5.3 |
- ▸Strong growth: 39% YoY
Momentum
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.3 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 2.1 |
- ▸Overbought (RSI 74)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.8 |
| Analyst rating | 7.5 |
| Price target | 5.3 |
- ▸LLM news sentiment: +0.56 (n=5)
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸Negligible insider selling — $14,650,750 (0.001% of mkt cap)
Peer rank
5.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.0 |
| quality rank | 9.0 |
| growth rank | 9.4 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.1 |
| support resistance | 1.5 |
| 52w position | 9.6 |
Risk (lower is worse)
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.6 |
| days to cover | 8.0 |
| volatility | 3.6 |
| put call | 8.6 |
| implied vol | 6.6 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 4.5 |
| news risk | 5.5 |
- ▸Above max pain $1125
Catalyst
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 6.2 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Downgraded from BUY WAIT — price $1427.28 vs the analyst target $1308.06: -8.4% upside; No upside left.
Engine technical detail
verdict_path:
L4:PATH_C2_GARP_WAIT|SANITY:BUY+upside<=0Passed (6)
- MOMENTUM:7.1>=5.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:83d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.6=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.63
Upside
-8.4%
Downside
13.2%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The C-path quality+growth combination triggered the HOLD_IF_HOLDING verdict: quality 8.1 and growth 7.7 both clear their thresholds, with asymmetric R:R of -0.63 supporting the read.
The strongest dimensions are Quality at 8.1, Growth at 7.7, and Catalyst at 7.4; the weakest are Value at 3.2, Technical at 4.4, and Insider at 5.0. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.63 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Earnings Outperformance
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Wide Moat Margin Quality
Trip ifNet margin compresses below 28% for 2 consecutive quarters.
- P3Exceptional Revenue Growth Trajectory
Trip ifRevenue growth falls below 20% year over year for 2 consecutive quarters.
- P4Valuation Ceiling Near Target
Trip ifUpside to analyst consensus price target exceeds 15% for 2 consecutive months.