Down More Than 20% From Its High, Is Now the Time to Buy Eli Lilly Stock?

Core Viewpoint - Eli Lilly is currently facing a decline in stock price despite being the most valuable healthcare stock globally, with a market capitalization nearing $700 billion and a significant drop of over 20% from its 52-week high of $972.53, raising questions about potential investment opportunities [1]. Group 1: Stock Performance and Valuation - Eli Lilly's stock has shown remarkable growth over the past five years, with returns exceeding 550%, but its current price-to-earnings (P/E) multiple is over 80, leading to investor hesitancy due to concerns about high valuation [1][2]. - The stock closed at $748.01 recently, reflecting a 7% decline from $804.73 on the day of the election, indicating potential investor concerns regarding future drug pricing policies under a new presidential administration [3]. Group 2: Growth Potential - Eli Lilly has a promising drug, tirzepatide, which could achieve peak annual sales exceeding $50 billion, having already received regulatory approval for diabetes and weight loss treatments [4]. - The company generated $40.9 billion in revenue and $8.4 billion in profit over the trailing 12 months, a significant increase from around $28 billion in sales a couple of years ago, showcasing impressive growth [5]. - Despite high valuation concerns, continued growth may lead to a reduction in the P/E multiple over time, with potential for the stock to reach a $1 trillion valuation in the future [6]. Group 3: Investment Outlook - Eli Lilly's substantial growth potential, particularly due to tirzepatide, justifies its premium valuation, making it unlikely to trade at lower P/E multiples in the near future [7]. - The company is considered a solid long-term investment, and acquiring shares at a discount could be a strategic move for investors [8].