Key Points
Eli Lilly is a leading GLP-1 drugmaker, and it has been generating impressing results recently.
It trades at close to 40 times its trailing earnings, but the premium may be justifiable.
When a stock has been soaring in value, it can be difficult to determine if it's still a good buy and has much more room to rise, or if it may be approaching a peak. This is especially true when investors are paying a premium for a business, as concerns may mount about its valuation.
Eli Lilly (NYSE: LLY) is a great example of that, with the healthcare giant amassing returns of around 400% in the past five years; it now trades at approximately 40 times its trailing earnings, and its market cap is north of $800 billion. It has a fairly high valuation, but given its terrific growth opportunities, it may still be worth investing in.
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One way to gauge how much upside a stock may have left is by looking at analyst price targets. While they aren't perfect, they can give investors a good indication of whether the stock may still be worth investing in. Here's how bullish analysts are about Eli Lilly right now.
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Analysts project Eli Lilly's stock could reach $1,221
The consensus analyst price target for Eli Lilly stock today is slightly over $1,221, suggesting an upside of about 35% from its current price. And 25 of the last 30 ratings are buy ratings. There has generally been a fair bit of bullishness around the stock, with many analysts boosting their price targets this year due to Eli Lilly's strong growth.
In February, the company reported strong fourth-quarter earnings (covering the last three months of 2025), with sales rising 43% to $19.3 billion and net income jumping 50% to $6.6 billion. The drugmaker has been generating strong numbers due to its highly popular GLP-1 drugs, Mounjaro and Zepbound.
Is Eli Lilly stock a no-brainer buy?
Analysts see plenty of room for Eli Lilly stock to rise, but those projections are for the short term; most price targets are based on expectations for the next 12 months. For long-term investors, the stock may deliver even stronger returns, especially if Eli Lilly continues to dominate the GLP-1 market as it has.
This year, the stock is down by 16% thus far, and it has been underperforming the S&P 500. And while I do think its high valuation could hinder some of its near-term returns, overall, it can still be an excellent long-term buy given its constant focus on growth and bringing new drugs to market. If you're looking for a quality stock to build your portfolio around, Eli Lilly can be an excellent option. While it may not be a cheap stock to own, its outstanding growth prospects suggest it does warrant a bit of a premium.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.