QS Research · Michael Burry's Scion Capital analyst template · 2006
ELI LILLY & Co (LLY)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction low · base case none · downside -23% · upside +45%
At $1,354.00 LLY trades at 46.2x TTM P/E, 34.7x TTM EV/EBITDA and 15.17x TTM EV/Sales, above every peer on sales and near the top on EBITDA, after a Q3 2026 revenue print of $24.4B (+39%) and a raised FY2026 revenue guide of $91.0-92.0B. The growth is real, but the base case at today's 34.7x multiple on $37.84B TTM EBITDA is $1,311.39B EV, which after $37.62B net debt equals today's $1,273.77B market cap, i.e. zero upside without either higher earnings or a higher multiple. A JNJ-like 26.8x de-rating case is about -23% and an MRK-like 49.7x re-rating case is about +45%; that is symmetric, not a deep-value long setup. A short would require assuming the multiple compresses despite 39% revenue growth, the $5.5B guidance raise and dated pipeline catalysts, which the record does not support as the base case. I pass: excellent business, but the price already discounts the visible good news.
Key numbers
- Share price: $1,354.00
- Market cap: $1,273.77B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $86.46B
- EV / EBITDA (TTM): 34.7x
- P/E (TTM): 46.2x
- Price / book: 31.63x
The 15 boxes
- ✓ 1. Long-form business notes
Lilly is a single-segment human-pharmaceuticals company (incorporated 1901, founded 1876) that between the FY2020 10-K and the FY2025 10-K shifted from a diabetes/neuroscience portfolio to four therapeutic areas dominated by incretins (Mounjaro, Zepbound, Trulicity) and newer oncology/immunology launches (Jaypirca, Inluriyo, Omvoh, Ebglyss, Kisunla). Over the same window revenue went from $24.54B (FY2020) to $65.18B (FY2025) and net income from $6.19B to $20.64B, with operating cash flow of $16.81B in FY2025 against $6.50B in FY2020. The money is made through U.S. wholesalers (McKesson, Cencora, Cardinal Health) and payer-negotiated rebates, increasingly supplemented by the LillyDirect direct-to-patient channel, and the model depends on patent/exclusivity life (Mounjaro/Zepbound U.S. compound patent to 2036, U.S. data protection to 2027) and on payer coverage of anti-obesity medicines.
- ✓ 2. Competitive advantage
The sources show scale, strong FY2025 earnings and cash generation, and rapid revenue growth, but they do not establish a durable moat beyond innovation and market exclusivity. FY2025 revenue was concentrated in a handful of products, with Mounjaro and Zepbound at 56% of total revenues, while the 10-K stresses intense global competition, generic/biosimilar erosion, payer access limits for obesity medicines and government price controls. On this record the advantage is current scale and product strength, not a protected franchise.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) revenue rose 39% to $24.4B on volume +53% against price -15%, and nine-month revenue rose 46% to $67.2B; gross margin improved 1.0pp to 83.9% of revenue, but reported net income of $6,451M (+16%) and EPS of $7.22 (+16%) were struck after $4,181M of acquired IPR&D charges ($4.57 per share vs $0.71 in Q3 2025). Management raised FY2026 revenue guidance to $91.0-92.0B and non-GAAP EPS to $35.00-36.00. Cash fell to $4.9B from $7.3B at 2025-12-31 while total debt rose $7.0B to $49.5B, reflecting $18.2B of business-development payments, $4.3B of buybacks and $4.6B of dividends in the nine months.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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