Eli Lilly and Company (LLY) Intrinsic Value & DCF Valuation
Drug Manufacturers - General · NYSE
Current Price
$1210.38
Intrinsic Value
Outside reliable range
What Is Eli Lilly and Company's Intrinsic Value?
The base-case DCF model produces an intrinsic value estimate for Eli Lilly and Company (LLY) that falls outside its reliable range, so treat any single number with extra caution. This usually happens with unusual cash flow patterns or rapid recent changes in the business.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Eli Lilly and Company (LLY) Undervalued?
Because the model output for LLY is outside the reliable range, no undervalued or overvalued read is given here. Use the calculator below to test your own assumptions instead.
COMPETITIVE MOAT
↑Dominant Drug Pipeline
Eli Lilly possesses a robust pipeline of innovative drugs, particularly in high-growth areas like obesity and Alzheimer's. This fuels future revenue and market leadership.
↑Strong Brand & Reputation
The company benefits from a long-standing reputation for developing life-changing medications. This fosters trust with physicians and patients, aiding market penetration.
↑Manufacturing Scale & Expertise
Eli Lilly's extensive manufacturing capabilities and expertise allow for efficient production of complex biologics. This is a significant barrier to entry for smaller competitors.
INVESTMENT RISKS
↓Clinical Trial Failures
Despite a strong pipeline, the inherent risk of clinical trial failures for new drug candidates remains. A significant setback could impact future growth prospects.
↓Patent Expirations
As key drug patents expire, Eli Lilly faces the threat of generic competition, which can significantly erode revenue streams for blockbuster drugs.
↓Intensifying Competition
The pharmaceutical industry is highly competitive, with rivals constantly developing new treatments. Eli Lilly must continuously innovate to maintain its market position.
Base case
LLY base case valuation
Base case assumptions: 12.1% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-07-29.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the LLY valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Eli Lilly and Company respond.
Open DCF Calculator for LLYCompany Overview
Eli Lilly and Company is a prominent global pharmaceutical firm dedicated to the research, development, and commercialization of human medicines across the world. Its therapeutic offerings include a comprehensive suite of diabetes medications. This encompasses various insulin formulations like Basaglar, the Humalog family (e.g., Mix 75/25, U-100, U-200, Mix 50/50), insulin lispro products (including protamine and mix 75/25), and the Humulin line (e.g., 70/30, N, R, U-500). Furthermore, Eli Lilly provides specialized treatments for type 2 diabetes, such as Jardiance, Trajenta, and Trulicity. In oncology, Eli Lilly offers a robust portfolio targeting various cancers. These include Alimta for non-small cell lung cancer (NSCLC) and malignant pleural mesothelioma; Cyramza, indicated for metastatic gastric cancer, gastro-esophageal junction adenocarcinoma, metastatic NSCLC, metastatic colorectal cancer, and hepatocellular carcinoma; Erbitux for colorectal and various head and neck cancers; Retevmo, used in metastatic NSCLC, medullary thyroid, and other thyroid cancers; Tyvyt for relapsed or refractory classic Hodgkin's lymphoma and non-squamous NSCLC; and Verzenio, prescribed for HR+, HER2- metastatic breast cancer, node-positive, and early breast cancer. For autoimmune and inflammatory conditions, the company markets Olumiant for rheumatoid arthritis, and Taltz, which addresses plaque psoriasis, psoriatic arthritis, ankylosing spondylitis, and non-radiographic axial spondyloarthritis. Addressing neurological and pain management needs, Eli Lilly provides Cymbalta for depressive disorder, diabetic peripheral neuropathic pain, generalized anxiety disorder, fibromyalgia, and chronic musculoskeletal pain. Emgality is available for migraine prevention and episodic cluster headaches, while Zyprexa treats schizophrenia, bipolar I disorder, and aids in bipolar maintenance. Other significant products include Bamlanivimab and etesevimab, along with Bebtelovimab, both developed for COVID-19. Cialis is offered for erectile dysfunction and benign prostatic hyperplasia, and Forteo is available for osteoporosis. Eli Lilly actively engages in strategic collaborations with numerous partners, including Incyte Corporation; Boehringer Ingelheim Pharmaceuticals, Inc.; AbCellera Biologics Inc.; Junshi Biosciences; Regor Therapeutics Group; Lycia Therapeutics, Inc.; Kumquat Biosciences Inc.; Entos Pharmaceuticals Inc.; and Foghorn Therapeutics Inc. Established in 1876, Eli Lilly and Company maintains its corporate headquarters in Indianapolis, Indiana.
Financial Metrics — LLY Stock Valuation Data
Revenue/Share (TTM)
$80.77
FCF/Share (TTM)
$15.18
ROIC (TTM)
32.1%
ROE (TTM)
101.3%
P/FCF
83.9x
EV/EBITDA
35.2x
FCF Yield
1.19%
Debt/Equity
1.39x
On a trailing twelve-month basis, LLY generates free cash flow per share of $15.18 alongside a ROIC of 32.1%, both central inputs for a DCF valuation. Its P/FCF ratio of 83.9x and FCF yield of 1.19% then frame how LLY is priced against peers on a cash flow basis.
Frequently Asked Questions
What is the intrinsic value of LLY?
Eli Lilly and Company currently generates $15.18 in free cash flow per share. At the current price of $1210.38, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is LLY undervalued?
LLY trades at a P/FCF ratio of 83.9x with a free cash flow yield of 1.19%. A high P/FCF means investors are paying more per dollar of free cash flow, which usually reflects expectations of future growth. However, whether LLY is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value LLY stock using DCF?
To perform a DCF valuation on Eli Lilly and Company: (1) Start with the trailing free cash flow per share ($15.18) as the base, (2) project future FCF growth over 5-10 years based on Drug Manufacturers - General industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting LLY's risk profile — with a debt-to-equity of 1.39x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to LLY?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Eli Lilly and Company, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Drug Manufacturers - General trends, then discounting those amounts to today's dollars. LLY's ROIC of 32.1% reflects how efficiently the company converts invested capital into profit.
How does WACC affect LLY stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For LLY, with a debt-to-equity ratio of 1.39x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 35.2x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See LLY PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Healthcare valuationsDCF and P/E value LLY with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-07-29. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.