Should You Buy Eli Lilly Stock? Here's My Honest Take.

Eli Lilly (NYSE: LLY) is in a league of its own. It's the largest healthcare company in the world by market cap, with the No. 2 company (Johnson & Johnson (NYSE: JNJ)) barely over half as big. Lilly's shares have more than quintupled in value over the last five years.

But should you buy Eli Lilly stock now? Here's my honest take.

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Business is booming

Make no mistake about it: Lilly's business is booming. The company's revenue soared 56% year over year in the first quarter of 2026 to $19.8 billion. Its adjusted earnings per share skyrocketed 156%.

Much of this growth is due to Lilly's GLP-1 franchise. Sales for Mounjaro, which is marketed in the U.S. for treating type 2 diabetes (T2D) and for both T2D and weight loss outside the U.S., jumped 125% year over year to $8.7 billion. Sales for Zepbound, the drug's U.S. brand for weight loss, increased 80% to nearly $4.2 billion.

Those numbers are so staggering that they make it easy to overlook Lilly's other success stories. For example, sales for eczema drug Ebglyss vaulted 141% higher in Q1 to $145 million. Another autoimmune disease drug, Omvoh, generated more than twice the sales in the latest quarter ($80 million) than it did in the prior year period. Blood cancer therapy Jaypirca's sales increased 79% year over year to $165 million.

Lilly recently won U.S. regulatory approval for its new GLP-1 pill, Foundayo. Analysts expect the drug to rake in full-year sales of around $1.6 billion. RBC Capital projects peak annual sales of a whopping $36 billion.

More good news could be on the way. Lilly's pipeline features 42 programs in late-stage clinical studies. The big drugmaker's buying spree, with the acquisitions of Ajax Therapeutics, Centessa Pharmaceuticals, 4E Therapeutics, and Kelonia Therapeutics, is further bolstering its pipeline.

The bear case against Lilly

Given all those positives, it might seem like buying Lilly's shares would be a no-brainer. However, there is a bear case against Lilly that investors shouldn't ignore.

Valuation stands at the top of the list. The big pharma stock trades at 33.4 times forward earnings. Its price-to-earnings-to-growth (PEG) ratio, which factors in analysts' earnings growth projections over the next five years, is 1.57. While that isn't a ridiculously high ratio, it suggests Lilly is still priced at a premium despite its robust growth prospects.

Another issue is that Lilly's fortunes hinge significantly on its GLP-1 drugs -- and competition is intensifying. Novo Nordisk (NYSE: NVO) has a new oral version of its weight-loss drug, Wegovy, on the market. The company's CagriSema, which is in late-stage testing, could challenge Lilly's Zepbound. Amgen (NASDAQ: AMGN), Pfizer (NYSE: PFE), Roche (OTC: RHHBY), and Viking Therapeutics (NASDAQ: VKTX) also all have promising weight-loss therapies in development.

In the meantime, Lilly has been forced to slash Mounjaro prices in China. The company cut prices to secure inclusion in China's state-run health insurance program. Speaking of China, the U.S. House of Representatives Select Committee on China is investigating Lilly's clinical drug trials in the country. In particular, the committee is concerned about Lilly's efforts involving Chinese military hospitals and in the Xinjiang region, where the Chinese Communist Party is accused of conducting a genocide of Uyghur Muslims.

To buy or not to buy?

So, should you buy Eli Lilly stock? I have a nuanced answer.

Lilly is, without question, one of the world's best pharmaceutical companies. It's a leader in multiple markets, notably the weight-loss market, which could reach $150 billion by 2035. Despite its premium valuation and other risks, I think that this stock is a good pick for long-term investors.

However, I suspect Lilly's share price could pull back further, creating an even better buying opportunity. That's what has happened several times in the past when the stock hit a record high.

I could be wrong, though. Perhaps the best approach is to buy a partial position in Lily and add to it later (perhaps after the company reports its second-quarter results on July 30, 2026). With a long-term growth trajectory like Lilly's, easing into a full stake could be a profitable strategy.

Keith Speights has positions in Pfizer. The Motley Fool has positions in and recommends Amgen, Eli Lilly, Novo Nordisk, and Pfizer. The Motley Fool recommends Johnson & Johnson, Roche Holding AG, and Viking Therapeutics. The Motley Fool has a disclosure policy.