Beyond AI trades, a growth ace! Eli Lilly (LLY.US) sees weight-loss drug volume growth and new product pipeline momentum, as JPMorgan raises its price target to $1,650.

JPMorgan is further raising its expectations for Eli Lilly's (LLY.US) earnings growth over the coming years. The research team led by analyst Chris Schott reiterated its "Overweight" rating and the stock's status as the bank's "top pick," raising its December 2027 price target to $1,650 from $1,500, implying roughly 20.1% upside from the October 29 closing price of $1,373.70. The bank is bullish not only on the current strong growth in weight-loss drug sales, but also on the long-term growth runway offered by overseas market expansion, rising U.S. obesity treatment penetration, and a wave of new oral products. As the AI capital expenditure cycle prompts the market to re-examine tech stock valuations and the ability to deliver on earnings, Eli Lilly is emerging as another growth theme drawing Wall Street's attention. As of the October 29 U.S. market close, Eli Lilly surged 6.63% against the trend, while the Nasdaq 100 Index and the Philadelphia Semiconductor Index fell 1.38% and 1.42%, respectively. Behind the share price move, the most direct catalyst was the company's third-quarter results beating market expectations and a substantial upward revision to full-year revenue guidance. Eli Lilly's revenue and core weight-loss drug sales were both strong, further validating the growth momentum of its metabolic business and providing the earnings basis for JPMorgan's upward revision to long-term profit forecasts. JPMorgan raised its 2026 revenue and adjusted earnings per share forecasts for Eli Lilly to $91.884 billion and $35.91, respectively, close to the upper end of company guidance; for 2027, it raised them to $109.714 billion and $55.20, up 5.0% and 10.2% from its previous model, and lifted revenue forecasts for 2027 and subsequent years by roughly $4 billion to $6 billion overall. The core of the bank's thesis is that overseas Mounjaro sales growth, rising U.S. obesity treatment penetration, and the gradual commercialization of new oral GLP-1 products will jointly extend Eli Lilly's growth cycle, enabling it to consolidate its leadership in an incretin market exceeding $200 billion. At the same time, clinical progress in non-obesity areas is also expected to broaden the company's long-term earnings sources. Price cuts did not block expansion: where does weight-loss drug growth come from? In the third quarter, Eli Lilly's revenue was $24.397 billion, up 39% year over year, about 7.9% above the LSEG analyst consensus of $22.61 billion cited by Reuters; adjusted earnings per share were $7.48, versus $7.02 a year earlier, about 19.5% above the market expectation of $6.26. The two core brands continued to beat expectations: Mounjaro, the weight-loss and glucose-lowering drug, posted global sales of $10.723 billion, up 65% year over year, above the market consensus of $10.16 billion; flagship weight-loss drug Zepbound posted global sales of $5.352 billion, up 49% year over year, above the market consensus of $5.09 billion. Based on disclosed figures, the two together contributed about 66% of group revenue and about 88% of the year-over-year revenue increase, showing that Eli Lilly's growth is still primarily driven by the core metabolic business. The shared active ingredient in Mounjaro and Zepbound is tirzepatide, a dual glucose-dependent insulinotropic polypeptide (GIP) and glucagon-like peptide-1 (GLP-1) receptor agonist that works through blood glucose regulation and appetite and food intake control. What JPMorgan values is the growth in the number of patients actually treated, driven jointly by clinical value and expanded payer coverage. In the third quarter, Eli Lilly's volume-price analysis showed volume growth of 53%, offsetting a 15% decline in realized prices; Mounjaro revenue outside the U.S. was about $5.7 billion, up 93% year over year. JPMorgan expects Mounjaro overseas revenue to grow from about $21 billion in 2026 to about $28 billion in 2027, while Zepbound is expected to grow from about $20 billion to more than $25 billion over the same period. This means the bank's bullish thesis does not depend on drug prices continuing to rise. On the contrary, JPMorgan still assumes prices will decline significantly over the remainder of this decade, but patient expansion and volume growth are expected to outweigh the negative impact of price cuts, driving continued growth in overall revenue and profit. Expanded Medicare coverage is providing new evidence of growth. Management said that since the launch of the Medicare GLP-1 Bridge program in July, more than 500,000 people have obtained Eli Lilly medicines through the program, and about 70% of newly enrolled patients chose Eli Lilly; after the initial patient transition phase, about 80% of participating treated patients had not previously used incretin therapy. This means expanded Medicare coverage is not only changing payment channels but also expanding the actual treated population. The oral small-molecule GLP-1 drug Foundayo (orforglipron) is expected to further lower the barrier to treatment. Unlike injectables, the drug requires no injection and no scheduling of dosing around food and water intake, offering another path to expand the patient population and international market presence. However, its quarterly revenue of $184 million came in below the market expectation of $216.86 million, indicating that the strong sales delivery of injectables and the commercial ramp of oral drugs remain at different stages. JPMorgan listed four groups of catalysts for Eli Lilly's subsequent growth: approval and launch of Foundayo for type 2 diabetes, expected in late 2026 to early 2027; entry into more than 40 international markets in 2027; launch of next-generation candidate retatrutide, expected in late 2027; and 2027 data readouts from TRAILBLAZER-3 in preclinical Alzheimer's disease and EMBER-4 in early breast cancer. Beyond the metabolic business, Eli Lilly's non-obesity therapeutic areas have also shown a growth foundation. In the third quarter, Jaypirca and Ebglyss sales grew 59% each, and Kisunla grew 175%; revenue from the company's key new product portfolio in immunology, oncology, and neuroscience doubled. Another layer of long-term value JPMorgan values is that the cash and profit generated by the metabolic business can support R&D and commercialization of more new products, thereby reducing Eli Lilly's long-term growth dependence on a single product cycle. The pivot for the $1,650 price target: how does revenue expansion profit and cash? In JPMorgan's forecast model, Eli Lilly's growth runway extends far beyond the next one or two quarters. The bank expects Eli Lilly's overall incretin business revenue to grow from $65 billion in 2026 to $82 billion in 2027, and to approach $110 billion in 2030. Group revenue is expected to reach $122.392 billion in 2028, with adjusted earnings per share of $61.92; earnings per share are expected to further reach about $74 and $86 in 2030 and 2032. Among these, JPMorgan's 2027 adjusted earnings per share forecast for Eli Lilly is $55.20, about 16.4% above the Bloomberg consensus of $47.44 cited in the report at the time, constituting an important expectation gap behind the bank's price target increase. Incretins are hormones secreted by the gut after eating that participate in blood glucose regulation; the two most important core hormones are GLP-1 (glucagon-like peptide-1) and GIP (glucose-dependent insulinotropic polypeptide). It is worth noting that JPMorgan's profit growth forecasts do not depend on continued gross margin expansion. Its model projects Eli Lilly's gross margins at approximately 84.2%, 84.0%, and 83.5% for 2026-2028, respectively, while the selling, general and administrative expense ratio will fall from 14.1% to 12.4%. This means that as revenue scale expands, expense dilution is expected to deliver operating leverage, becoming an important source of profit growth. At the same time, the 2027 earnings growth also includes a base effect from the larger acquisition-related R&D expenses in 2026. Therefore, when analyzing future earnings growth, it is necessary to distinguish between improvements from main business expansion and accounting effects from changes in acquisition-related expenses. Cash flow performance determines how high a valuation this growth can support. JPMorgan expects Eli Lilly's free cash flow to the firm (FCFF) to increase from $32.550 billion in 2026 to $39.168 billion in 2027 and $48.793 billion in 2028, assuming capital expenditures of $6.5 billion in each of these three years. All of the above are brokerage forecasts. Based on the report's share price, the forecast price-to-earnings ratios for 2027 and 2028 are 24.9x and 22.2x, respectively. JPMorgan's $1,650 price target uses a discounted cash flow (DCF) method, with an 8.5% weighted average cost of capital (WACC) and a 2.5% perpetual growth rate, while accounting for the gradual decay of existing products and incorporating risk-adjusted pipeline value. Its long-term confidence comes from expectations of double-digit growth extending into the early 2030s and relatively limited patent and market exclusivity expiration risk over the next decade or so. However, whether the price target can be realized still depends on whether volume growth, expense efficiency, and new product success rates can absorb competitive and policy-driven pricing pressure, rather than simply relying on maintaining a high valuation multiple. Company raises full-year revenue guidance, main business profitability continues to improve Eli Lilly's strong third-quarter performance was reflected not only in sales but also in its full-year operating outlook. The company raised its 2026 revenue guidance to $91 billion-$92 billion from $85 billion-$87 billion, an increase of $5.5 billion at the midpoint; its defined Performance Margin guidance was raised to 52.0%-52.5% from 49.0%-50.5%. It is worth noting that adjusted earnings per share guidance was instead lowered to $35-$36 from $35.50-$36.50. This is not because expectations for the main business weakened, but because $4.07 per share contributed by improved underlying operations was offset by a $4.57 per share impact from third-quarter acquired in-process research and development (IPR&D) expenses. Acquired in-process research and development (IPR&D) here specifically refers to expenses recognized in the current period under applicable accounting rules for assets such as drug programs acquired through acquisitions that have not yet completed R&D, and therefore weighs on current profit. Eli Lilly's adjusted earnings per share measure still includes such expenses. Therefore, the upward revision to the company's revenue and operating margin guidance reflects that main business profitability is still improving; acquisition-related expenses, meanwhile, created a temporary drag on reported earnings per share. Understanding the difference between these two effects helps judge the true change in Eli Lilly's current earnings performance. Wall Street cross-validation: injectable delivery drives upward revisions, oral drugs determine the next round of incremental growth Besides JPMorgan, other institutions also adjusted their views on Eli Lilly after the earnings release, but their assessments of share price upside were not uniform. Jefferies Financial Group Inc. maintained a "Buy" rating and raised its price target to $1,610 from $1,440, implying about 17.2% upside from the $1,373.70 closing price. Barclays' October 29 rating record maintained a $1,400 price target, implying about 1.9% upside. BMO analyst Evan Seigerman believes Foundayo remains behind expectations, but the strong performance of Eli Lilly's broader commercial business reduces the importance of this shortfall; Guggenheim analyst Seamus Fernandez emphasized the beat in the cardiovascular-metabolic business and the potential for Kisunla to gradually grow into a blockbuster drug. Overall, Eli Lilly's third-quarter adjusted gross margin reached 84.4%, and its defined Performance Margin reached 54.2%, up 5.9 percentage points year over year, further validating the profitability of its core business. At the same time, the company still needs continuous investment in capacity expansion and R&D; this is not a growth story that requires no capital expenditure. Eli Lilly's investment logic is extending from sales growth of a single weight-loss drug product to patient population expansion, overseas market penetration, commercialization of new oral products, and product succession in non-obesity areas. What JPMorgan and other institutions value is the earnings foundation already established by the existing metabolic business, and whether these growth drivers can further sustained cash flow and upward revisions to earnings forecasts. For Eli Lilly, the key in the next stage is not just how many weight-loss drugs it can sell, but whether it can convert its current market leadership into sustained profit growth and reduce dependence on a single product cycle through new product succession. As growth assets beyond AI trades regain attention, Eli Lilly's ability to deliver on long-term earnings will also remain a key focus of ongoing Wall Street assessment.