Eli Lilly Just Delivered Another Blowout Quarter. Is This Unstoppable Growth Stock Still a Buy?

Over the past two years, Eli Lilly (NYSE:LLY) has hardly performed like a mature pharmaceutical company. The company's financial results have looked much more like those of a smaller tech corporation still in its growth phase. The bears keep waiting for the drugmaker's revenue and earnings growth to drop significantly, and it looks like they will have to wait at least a little longer. Eli Lilly's third-quarter update is out, and it is yet another impressive quarter.

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GLP-1 products maintain their momentum

Eli Lilly's GLP-1 products have been doing most of the heavy lifting in recent quarters, and that continues to be the case. The company's Zepbound, a medicine approved for weight loss, and Mounjaro, a diabetes therapy, account for the lion's share of the top line.

Eli Lilly's total revenue for the period jumped 39% year over year to $24.4 billion. Note that the company has now almost reached a $100 annualized revenue run rate. During the period, Mounjaro's sales increased 65% year over year to $10.7 billion, while Zepbound’s revenue increased 49% year over year to $5.4 billion.

Mounjaro and Zepbound both experienced lower net realized prices during the period, but volume growth more than offset that. This highlights just how popular these therapies are. Further, Eli Lilly's other GLP-1 medicine, Foundayo -- an oral weight loss drug -- contributed $184 million in revenue.

Foundayo isn't just cannibalizing Zepbound’s sales, as some investors might have feared when the medicine was first approved in April. Eli Lilly made progress outside of its core therapeutic area during the quarter. Several medicines, including Kisunla for Alzheimer's disease, Ebglyss for eczema, and Jaypirca, a cancer drug, also posted strong sales growth.

Eli Lilly recorded non-GAAP net earnings per share of $7.48, up 7% year over year -- the slow earnings growth was largely due to a negative impact from acquisition-related expenses. It's nothing to worry about, especially since it came in above analyst estimates, as did the company's revenue.

On top of that, Eli Lilly increased its guidance for the full fiscal year 2026. The drugmaker now expects revenue between $91 billion and $92 billion, well above its previous range of $85 billion to $87 billion. It's no wonder the company's shares jumped after this beat-and-raise quarter.

Eli Lilly has plenty of room to run

Is it too late to buy Eli Lilly stock? Some might think so. The company will face even more pricing pressure in the GLP-1 market over the medium term as other pharmaceutical giants launch competing medicines. Indeed, there are plenty of Phase 3 assets in diabetes and obesity, and some of them look particularly well differentiated from Eli Lilly's own products.

For instance, some companies are developing medicines that can be administered monthly or less frequently -- a significant advantage that could allow them to capture substantial market share. In the third quarter, Mounjaro and Zepbound accounted for nearly 66% of the company's total revenue. Eli Lilly could face a catastrophic drop in sales if these products encounter significant competition over the next few years.

This is certainly a risk to keep in mind, but Eli Lilly seems able to overcome it. For one, the GLP-1 market should continue to expand. One reason is that penetration remains fairly low. According to some estimates, roughly 7% of diabetes patients and 2% of people with obesity used GLP-1 medicines as of earlier this year.

Yet these two conditions contribute tens of billions to healthcare costs, as they are linked to many other diseases and a shorter lifespan. GLP-1 products have proven highly effective in treating both conditions, and this drug class is also being developed for many other diseases, such as sleep apnea, Metabolic Dysfunction-Associated Steatotic Liver Disease, and more.

They are even showing promise as combination treatments for some immune conditions, such as plaque psoriasis. We could still be in the early innings of this market's growth, and even as other drugmakers launch new medicines, Eli Lilly's addressable market will remain massive. Second, the company's pipeline in this field is arguably second to none.

One of the company's most promising candidates is retatrutide, which mimics the action of the GLP-1, GIP, and glucagon hormones. Retatrutide's clinical trial data across diabetes, obesity, and some obesity-related conditions have, so far, been fantastic. Third, Eli Lilly's pipeline is significantly diversified, and the company should have a much broader approved lineup within several years. Those are all good reasons to stick with Eli Lilly. Its market-beating days aren't over.

Prosper Junior Bakiny has positions in Eli Lilly. The Motley Fool has positions in and recommends Eli Lilly. The Motley Fool has a disclosure policy.