QS Research · Michael Burry's Scion Capital analyst template · 2006
ELI LILLY & Co (LLY)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -14% · downside -27% · upside +6%
Using section 13's TTM base, LLY has $37.84B EBITDA, $27.58B net income, $37.62B net debt and 940.75M shares; at 30.0x EV/EBITDA, 30.0 x $37.84B = $1,135.2B EV, less $37.62B = $1,097.6B equity, / 940.75M = $1,167/share, or -14.4% vs the $1,362.13 price. The downside uses the 25.6x ABBV EV/EBITDA print: 25.6 x $37.84B = $968.7B EV, less $37.62B = $931.1B equity, / 940.75M = $990/share, or -27.3%. The clean upside uses 49.5x ABBV P/E on $27.58B: 49.5 x $27.58B = $1,365.2B equity, / 940.75M = $1,451/share, or +6.5%; I do not use the MRK 49.8x EV/EBITDA +44% case as the upside because MRK's $8.16B EBITDA on $67.38B revenue makes that multiple distorted. The market is not missing the incretin growth — it is paying 46.5x TTM P/E and 34.9x EV/EBITDA for it while realized prices fall 15% and 2027 U.S. data-protection risk sits on the largest franchise; that is a watch, not a long, and the short rule is not met because the base case is not -30%. No cycle averaging was used; every operating figure above is TTM to Sep 30 2026.
Key numbers
- Share price: $1,362.13
- Market cap: $1,281.42B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $86.46B
- EV / EBITDA (TTM): 34.9x
- P/E (TTM): 46.5x
- Price / book: 31.82x
The 15 boxes
- ✓ 1. Long-form business notes
Lilly is a single-segment human-pharmaceutical company (incorporated 1901, business founded 1876) that discovers, develops, manufactures and markets branded medicines in roughly 90 countries, with U.S. distribution concentrated in three wholesalers. Across FY2020–FY2025 revenue rose from $24.54B to $65.18B, pre-tax income from $7.23B to $25.73B and operating cash flow from $6.50B to $16.81B, while the marketed portfolio rotated from an insulin/legacy-heavy list toward incretin cardiometabolic drugs (Mounjaro, Zepbound) plus new oncology, immunology and neuroscience launches. The FY2025 filing's own risk disclosures flag two commercial dependencies: reimbursable access for anti-obesity medicines and patent/data-protection expiries (Trulicity U.S. 2027, Jardiance U.S. 2029, Mounjaro/Zepbound U.S. data protection 2027 against a 2036 compound patent).
- ✓ 2. Competitive advantage
The sources show commercial scale and strong cash generation, but they do not establish a durable competitive moat. LLY's own 10-K describes highly competitive global pharmaceutical markets where success depends on continual innovation, formulary placement, payer coverage, and price, and where generic or biosimilar entry can rapidly erode branded revenue. Revenue is concentrated: six products were 82% of FY2025 total revenue, with Mounjaro and Zepbound alone at 56%, while FY2020-FY2025 revenue rose from $24.54B to $65.18B and operating cash flow from $6.50B to $16.81B.
- ✓ 3. 10-Q takeaways
Q3 2026 revenue was $24,397M, +39% YoY, on volume +53% and price -15%; gross margin rose to 83.9%. Net income was $6,451M, +16%, and diluted EPS $7.22, with the increase attributed to gross margin but partly offset by higher acquired IPR&D of $4,181M versus $656M, plus higher R&D and SG&A. Cash fell to $4.9B from $7.3B at December 31, 2025, while total debt rose $7.0B to $49.5B; nine-month buybacks were $4.3B and dividends $4.6B. The 10-Q gives no numeric guidance; outlook flags orforglipron approval timing and incretin channel uptake, with pricing, IRA, and tariff risks remaining.
- ✓ 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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