LLY - Eli Lilly: Don't Overpay For Miracle Drugs
2024-05-03 06:12:44 ET
Summary
- Eli Lilly and Company's stock has seen a significant rally due to excitement about its weight loss drug, Zepbound, among other products.
- It's a healthy, growing business with higher revenues each year, but adjusting for cash outflows from M&A and patents reveals a different picture.
- Recent Q1 results showed positive signs with high gross margins and revenue growth driven by new drug sales, but this alone does not explain the multiple expansion.
- Investors would be better served picking up shares in companies with prices more tied to their fundamentals and cash flows.
A friend of mine who works in billing for healthcare expenses asked for my opinion not long ago on Eli Lilly and Company ( LLY ), as their products regularly come under her notice. LLY is a stock that's gotten a lot of attention because its shares did this over the past year:
LLY 1Y Price History (Seeking Alpha)