We're raising our Eli Lilly price target as obesity-drug boom continues

Key Points:

• Eli Lilly's shares hit a new record high after reporting strong Q3 results, with revenue up 39% year-over-year to $24.4 billion and adjusted EPS beating expectations at $7.48, driven primarily by robust growth in its obesity drug business.
• The GLP-1 obesity and diabetes drugs Mounjaro and Zepbound showed significant sales increases, with Mounjaro revenue rising 65% to $10.7 billion and Zepbound up 49% to $5.35 billion, supported by expanding international markets and Medicare access programs.
• Despite a slower start for the oral obesity drug Foundayo, Lilly remains optimistic about its growth potential, planning label expansions and new market launches in 2027, while continuing to invest in next-generation obesity and diabetes treatments like retatrutide and eloralintide.
• Lilly raised its full-year 2026 revenue guidance to $91-$92 billion and performance margin to 52%-52.5%, although it slightly lowered its EPS forecast to $35-$36 due to acquisition-related charges, reflecting confidence in sustained volume growth amid pricing pressures.
• CEO David Ricks emphasized the large untapped market for obesity care globally and highlighted ongoing efforts to improve access and innovation, reinforcing investor confidence and prompting an increased price target for Lilly shares to $1,500.