Equity Research: Eli Lilly & Co.

ELI LILLY & Co. (LLY) is a leading pharmaceutical manufacturer specialising in key therapeutic areas such as diabetes, oncology, immunology, and neuroscience. The company operates in over 110 countries, consistently introducing innovative treatments and health solutions to global markets. Its historic portfolio includes first of its kind pharmaceuticals such as insulin, penicillin, and Ozempic, Prozac, and today's market leading weight loss medication Mounjaro. Using Discount Cash Flow model, with triangulation supported by P/E Implied Valuation and Dividend Discount methods, we estimate an 18-month target price for LLY to be $909,11 representing a moderate upside of 23,2% (14,9% annualized) from base price of $737.67 as observed on May 30, 2025. Considering all information presented hereafter, and the expected future upside, we believe ELI LILLY earns a BUY status. Analysing company history, and looking into the future, the demand for LILLY's key top-line GLP-1 drivers, Mounjaro and Zepbound, remains strong. Coupled with IP lifetimes of ten or more years for various compounds in company's portfolio, there is strong reason to believe that LILLY will be able to sustain market leadership in diabetes and weight loss sector. The company continues to efficiently utilise its global manufacturing network to serve both domestic and foreign markets, integrate new facilities, technologies, and partnerships to boost its R&D pipeline, all of which support both near-term success and long-term sustainability. Potential risks to our valuation include possible slowdown in sales of portfolio leading pharmaceuticals due to competitive pressure in the GLP-1 market, especially once generics are introduced. Failure to secure next generation medicines while current IP patents runout, will hurt LILLY once pricing regulations enforcements on the diabetes medications, amongst others, are enforced by government initiatives to lower consumer costs. Ultimately, we believe ELI LILLY executes a well-balanced business growth approach between investment in future innovation while efficiently delivering existing products to the market, at the core of which lies strong research to identify