Over the past five years, Eli Lilly (LLY 2.22%) has been on a tear. It has made significant breakthroughs in the pharmaceutical space, and financial results have soared, with the stock price following suit. Last year, it became the first healthcare company to reach a $1 trillion market cap, although it has since lost some momentum. However, Eli Lilly's outlook remains bright.
Despite intensifying competition within its most important therapeutic area, the company could be one of the best stocks you buy this year. Read on to discover why.
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Financial results will remain strong
Eli Lilly is riding the wave of a booming weight management market. Eli Lilly's tirzepatide, sold under the brand names Mounjaro in treating Type 2 diabetes and Zepbound in obesity, is performing exceptionally well. The medicine has earned other approvals, including for obstructive sleep apnea.
The result? It is generating mouthwatering sales. Through the first nine months of 2025, tirzepatide's revenue was $24.8 billion. It overtook Keytruda as the world's best-selling medicine. And there is more where that came from. Don't expect tirzepatide's momentum to stop this year, or next. Some analysts have projected almost $62 billion in sales for the medicine by 2030.
NYSE: LLY
Key Data Points
More clinical and regulatory milestones
Several pharmaceutical and biotech companies are seeking to steal market share from Eli Lilly in the weight management field. Its eternal rival, Novo Nordisk (NVO 2.05%), remains its biggest competitor, but others include Amgen and Pfizer. Unfortunately for them, Eli Lilly has produced clinical trial results that are second to none. Consider orforglipron, an oral weight loss and diabetes candidate that successfully completed phase 3 studies last year.
Novo Nordisk recently earned approval for the first weight loss pill, an oral version of its anti-obesity medicine Wegovy, but orforglipron won't be far behind, considering it received a voucher from regulators that will allow for a one- to two-month review period, versus the usual 10 to 12 months. Orforglipron is already under consideration for approval, and Eli Lilly could receive word by the end of February.
Then there is Eli Lilly's retatrutide, which delivered an extremely impressive mean weight loss of 28.7% at the highest dose in a phase 3 study -- a performance never seen in the industry until now. With these candidates in the pipeline, Eli Lilly should remain the top player in the anti-obesity niche.
Won't valuation be an issue?
Eli Lilly is trading at 33 times forward earnings. The average for the healthcare sector is only 18.2. Does that make Eli Lilly's shares expensive? Not in my view. Eli Lilly's revenue and earnings are growing at a rate that justifies its premium. In fact, the drugmaker's price/earnings-to-growth is only 0.98, well within the undervalued range for this metric.
All of these reasons highlight why Eli Lilly is firing on all cylinders, has excellent near- and mid-term prospects, and could be a great stock to own in 2026 and beyond.
