Buy, Sell, Or Hold LLY Stock At $870?

Core Insights - Eli Lilly's fourth-quarter performance exceeded expectations with adjusted earnings of $5.32 per share, surpassing the projected $4.95, while revenue was $13.5 billion, slightly below the consensus estimate of $13.6 billion due to lower price realization for Mounjaro [1][3][4]. Financial Performance - The company achieved a 45% year-over-year revenue growth, driven by strong demand for its obesity drug Zepbound, which generated $1.9 billion in sales. Mounjaro sales increased by 60% year-over-year to $3.5 billion, and Verzenio sales rose by 36% to $1.6 billion, although both Zepbound and Mounjaro sales fell short of consensus estimates [3][4]. - Eli Lilly's gross margin improved by 90 basis points to 83.2% in Q4, contributing to earnings of $5.32 per share, more than double the $2.49 from the same quarter last year [4]. Future Outlook - The company projects its revenue for the upcoming year to be between $58 billion and $61 billion, with a gross margin between 41.5% and 43.5%, and adjusted earnings expected to range from $22.50 to $24.00 [4]. - Analysts have set an average price estimate of $980 for Eli Lilly stock, indicating a potential 12% upside from its current level of $870, supported by strong sales growth and a robust outlook [7]. Market Performance - Eli Lilly's stock has delivered a 50% return year-to-date, significantly outperforming the S&P 500's 28% gain during the same period. The stock has consistently generated better returns than the broader market over the past four years [5]. - The stock's current trading at 17 times trailing revenues is above its average price-to-sales ratio of 14 times over the last three years, suggesting room for growth in valuation [7].