Value
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.0 |
| P/S | 0.6 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 4.9 |
| PEG | 4.9 |
| Analyst target | 5.0 |
- ▸Forward P/E: 25.5x
- ▸PEG: 1.61
LLY · Why this verdict
Why Eli Lilly and (LLY) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score6.6/10
ConfidenceMEDIUM
MacroNEUTRAL
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. | ↓Deteriorating |
| 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.
↓DeterioratingWarnings
- 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
8.2/10data 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 | 5.5 |
| FCF quality | 2.9 |
| Moat | 7.5 |
| Rule of 40 | 9.5 |
| Piotroski F | 6.7 |
- ▸Excellent ROE: 107%
- ▸Strong margins: 35%
- ▸Earnings quality RED FLAG: 36% FCF/NI
- ▸Wide economic moat
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 56% YoY
Momentum
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 4.9 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.7 |
| Analyst rating | 7.5 |
| Price target | 7.0 |
- ▸LLM news sentiment: +0.34 (n=7)
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 9.9 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $18,631,462 (0.002% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.3 |
| quality rank | 9.0 |
| growth rank | 9.4 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
9.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 9.1 |
| 52w position | 7.9 |
Risk (lower is worse)
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.4 |
| days to cover | 7.4 |
| volatility | 4.4 |
| put call | 5.1 |
| implied vol | 2.9 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 4.2 |
| news risk | 5.5 |
- ▸High IV: 63%
- ▸Above max pain $560
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.2 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 2 days
How the verdict was assembled
Engine trigger
Earnings in 2 days. Wait until post-earnings.
Engine technical detail
verdict_path:
L3:NEWS_BLOCK|ENTRY_STICKY:WITHIN_BANDPassed (5)
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:EARNINGS:0.60
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.1<4.5
- ASYMMETRY:0.4<1.5@spot
- EARNINGS_PROXIMITY:2d<=7d
Warning (0)
none
Reward-to-Risk
0.38
Upside
+2.5%
Downside
6.5%
Sizing output
STARTER
Setup— — No clear chart pattern; technical signals are mixed
EdgeTemporary headwind — High quality (8.2) with weak momentum (3.1)
SuitabilityModerate — Balanced profile
Investment implication
A recent news event triggered an L3 news-block on the verdict path. Trigger: Earnings in 2 days. Wait until post-earnings. The 10-dimension scores remain Growth at 10.0 (strongest), but MOMENTUM:3.1<4.5 also fails — the news block is the proximate trigger, not the sole driver.
The strongest dimensions are Growth at 10.0, Technical at 9.0, and Quality at 8.2; the weakest are Momentum at 3.1, Value at 3.4, and Peer rank at 5.2. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 0.38 and an engine sizing output of STARTER.
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.