Will Eli Lilly's New GLP-1 Pill Get the Stock Get Back to a $1 Trillion Valuation?
Key Points
Eli Lilly has another promising drug in its portfolio with Foundayo.
Its growth rate has been more than 40% in recent quarters due to the success of its current GLP-1 drugs.
The stock's valuation is high, but a premium may be warranted given its growth prospects.
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The trillion-dollar club is an exclusive one, featuring some of the most successful and promising companies in the world. Joining the ranks and reaching a $1 trillion valuation is a milestone. But staying there is also a challenge.
Eli Lilly (NYSE: LLY) became the first healthcare company to reach $1 trillion in market cap last year. However, given its poor start to 2026, it has fallen well below that. Entering trading on Monday, the company's valuation was around $830 billion.
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There has been more excitement around the stock lately with the approval of its GLP-1 weight loss pill. Could that give the stock the boost it needs to get back to a $1 trillion valuation this year?
Image source: Getty Images.
A stronger growth rate could lead to much more bullishness
On April 1, the Food and Drug Administration approved Foundayo, which is Eli Lilly's weight loss drug. The pill will be easier for people to take than an injectable and help reach a broader range of patients, who may not have wanted to take an injectable. Eli Lilly's growth rate has been elevated in recent years due to the success of Mounjaro and Zepbound, its GLP-1 drugs that are already generating billions in revenue, and this approval could give it a further boost.
LLY Revenue (Quarterly YoY Growth) data by YCharts
If Eli Lilly maintains a high growth rate of over 40%, it could become too attractive an option for growth investors to pass up. The big question, however, is whether all this has already been effectively priced into Eli Lilly's share price.
The stock is pricey, but it may still rise higher anyway
Although Foundayo's approval was a positive development for Eli Lilly, it hasn't led to its shares taking off. The big reason why is that the market was widely expecting approval to happen, given how well the drug was performing in clinical trials. It would have been more of a surprise if regulators hadn't approved the drug.
Currently, Eli Lilly's stock trades at more than 40 times its trailing earnings. And although that's down from more than 70 times earnings a year ago, it's still a fairly high price premium, and one investors may balk at paying given the growing competition in the GLP-1 space.
Nonetheless, there may still be room for the stock to get back to $1 trillion if its financial results get a boost from Foundayo. The consensus analyst price target for the stock is $1,224, which implies an upside of around 32%; Eli Lilly's shares would need to rise by just 20% to reach a $1 trillion valuation.
Although its valuation is high, Eli Lilly is likely to be part of the trillion-dollar club yet again; it's just a matter of how quickly that happens. If you're a long-term investor, this can be an excellent stock to simply buy and hold.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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