What Should Investors Know About LLY Stock?

We're taking a closer look at Eli Lilly and Company today, after UBS upgraded the stock to buy on hopes that its forthcoming type 2 diabetes drug could become a bestseller. Today, its shares moved 4.9% compared to -0.8% for the S&P 500. Increased investor interest and volatility surrounding the stock are not reason enough to buy in -- you should first perform your own due diligence. Here are some figures that can get you started:

  • Eli Lilly discovers, develops, and markets human pharmaceuticals worldwide.

  • Eli Lilly and has moved 27.7% over the last year compared to -14.8% for the S&P 500 -- a difference of 42.5%

  • LLY has an average analyst rating of buy and is 2.17% away from its mean target price of $304.28 per share

  • Its trailing 12 month price to earnings (Eps) is $6.27 per share

  • Eli Lilly and has a trailing 12 month Price to Earnings (P/E) ratio of 49.6 while the S&P 500 average is 15.97

  • Its forward 12 month price to earnings (Eps) is $6.27 per share and its forward P/E ratio is 32.4

  • LLY has a Price to Earnings Growth ratio of 1.84, which shows the company is potentially overvalued when we factor growth into the price to earnings calculus.

  • The company has a Price to Book (P/B) ratio of 34.6 in contrast to the S&P 500's average ratio of 2.95

  • Eli Lilly and is part of the Healthcare sector, which has an average P/E ratio of 13.21 and an average P/B of 4.07

  • LLY has reported YOY quarterly earnings growth of -31.4% and gross profit margins of 75.4%

  • The company has a free cash flow of $4,991,925,248, which refers to the total sum of all its inflows and outflows of cash over the last quarter

Since it has an inflated P/E ratio, an elevated P/B ratio Eli Lilly is likely overvalued at today's prices. But if the predictions about the success of its new drug hold true, growth investors may consider this an entry point for a long term investment. The company is the subject of mostly positive market sentiment as it has an analyst consensus of some upside potential, a buy rating, a very low short interest and, a significant number of institutional investors.

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The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.