Eli Lilly and Company (LLY) Intrinsic Value & DCF Valuation
Drug Manufacturers - General · NYSE
Current Price
$1133.00
Intrinsic Value
$762.7
-48.6% margin of safety
What Is Eli Lilly and Company's Intrinsic Value?
As of 2026-06-12, our base-case DCF model estimates the intrinsic value of Eli Lilly and Company (LLY) at $762.7 per share, compared with a market price of $1,133, a margin of safety of -48.6%. The base case assumes 20.0% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $642.51 to $898. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How our DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Eli Lilly and Company (LLY) Undervalued?
At the current price of $1,133, LLY trades above our base-case intrinsic value estimate by a meaningful margin. By this model the stock looks expensive, though faster growth than we assume would change the picture.
COMPETITIVE MOAT
↑Obesity Drug Dominance
Eli Lilly's strong momentum in obesity drugs, fueled by promising data and coverage expansion, creates a significant competitive advantage. This leadership position is difficult for rivals to quickly replicate.
↑Pipeline Innovation Power
A robust pipeline of novel therapeutics, particularly in areas like obesity and Alzheimer's, provides a continuous stream of potential blockbusters. This innovation engine drives future growth and market share.
↑Brand and Regulatory Hurdles
Established brand recognition and the high cost and complexity of drug development and regulatory approval create substantial barriers to entry. New competitors face immense challenges in gaining market access.
INVESTMENT RISKS
↓Policy and Investment Uncertainty
Scaling back investments in key markets like Germany due to policy concerns highlights potential regulatory headwinds. This can impact future expansion and profitability.
↓Intensifying Competition
While Eli Lilly leads in obesity, the sector is attracting significant investment. Competitors are actively developing their own treatments, which could erode market share over time.
↓Pricing and Reimbursement Pressures
The success of blockbuster drugs is increasingly tied to payer negotiations and government policies. Any adverse changes in pricing or reimbursement could significantly impact revenue.
Base case
LLY base case valuation
Intrinsic Value
$762.7
Margin of safety
-48.6%
Expected annual return
-7.6%
Base case assumptions: 20.0% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-06-12.
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
78.6x
EV/EBITDA
33.0x
FCF Yield
1.27%
Debt/Equity
1.39x
Based on trailing twelve-month data, LLY shows a free cash flow per share of $15.18 and a ROIC of 32.1%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 78.6x and FCF yield of 1.27% are important context metrics when evaluating LLY's stock valuation relative to peers.
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 $1133.00, 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 78.6x with a free cash flow yield of 1.27%. This elevated P/FCF suggests the market is pricing in significant 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% indicates strong capital efficiency, which supports higher growth assumptions in the DCF model.
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 33.0x, 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 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.