Warning: This Skyrocketing Stock Has a Hidden Risk
Key Points
Eli Lilly makes the best-performing GLP-1 drugs on the market today.
The company faces intense competition and has a relatively short window of opportunity.
- 10 stocks we like better than Eli Lilly ›
Eli Lilly (NYSE: LLY) is winning the race in the GLP-1 weight-loss drug niche. It was second to market, but its Mounjaro and Zepbound shots have proven to be more effective than Novo Nordisk's (NYSE: NVO) Ozempic/Wegovy, which was first to market. This is good news, but there are risks you should consider before buying Eli Lilly.
Eli Lilly's big hidden risk
Wall Street is massively excited by the success of Eli Lilly's Mounjaro and Zepbound shots. That success, however, is also a big hidden risk. At the end of 2025, these two drugs accounted for 56% of the company's revenue. That is a huge amount of revenue tied to just two drugs.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
Image source: Getty Images.
Mounjaro's sales rose 99% year over year. Zepbound did even better, with sales increasing by a shocking 175%. Basically, almost all of the company's 45% top-line increase in 2025 was related to just these two GLP-1 weight loss drugs. That potentially sets up some very big problems for Eli Lilly.
Are investors too excited about Eli Lilly?
For starters, emotional investors often go to extremes. With Eli Lilly's price-to-earnings ratio sitting at 45x, it seems like Wall Street may be pricing in perfection here. Granted, the company provided strong guidance for 2026 when it reported 2025 earnings, but with a valuation that high, anything less would have likely resulted in a share price pullback.
This highlights some other risks associated with Eli Lilly's GLP-1 success. Novo Nordisk just beat Eli Lilly to market with a GLP-1 pill, giving this competitor an opportunity to regain market share. And Pfizer is another large pharmaceutical stock that's trying to break into the GLP-1 space. In other words, competition is fierce, and Eli Lilly may not remain the industry leader forever.
The longer-term problem here is that new drugs are granted only a limited period of market exclusivity. When patent protection expires, generic competition generally comes in and leads to material revenue declines for the branded drug. So even in the best-case scenario, Eli Lilly's GLP-1 success can't last.
Don't blindly buy Eli Lilly
Make sure you understand how reliant Eli Lilly is on its GLP-1 drugs before you buy the stock. If you don't, you might find that the stock's valuation, competition, and the normal business cycles of the drug sector all turn into big headwinds you weren't expecting.
Should you buy stock in Eli Lilly right now?
Before you buy stock in Eli Lilly, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Eli Lilly wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $420,595!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,152,356!*
Now, it’s worth noting Stock Advisor’s total average return is 899% — a market-crushing outperformance compared to 194% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of February 19, 2026.
Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
Recommended Articles
