Key Points
Eli Lilly stock is down 13% from its 52-week high.
Analysts still see some decent upside for the stock, with its average price target being north of $1,200.
The company experienced tremendous growth last year.
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It's been a tough start for Eli Lilly (NYSE: LLY) stock this year. Entering this week, the pharmaceutical giant's value has fallen by 8%. While its five-year gains are still impressive at around 380%, there's been less excitement around the healthcare company and other GLP-1 stocks this year, as the healthcare sector as a whole is coming under pressure to reduce prices.
But although Eli Lilly's stock has been falling, it's still not all that cheap, as it trades at 43 times its trailing earnings. That's far higher than the S&P 500 average earnings multiple of 25. For investors, the big question is whether Eli Lilly is worth such a significant premium and if it's still a good buy right now, or if you may be better off waiting for more of a decline.
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Is Eli Lilly stock running out of room to rise higher?
Eli Lilly's stock has hit highs of more than $1,100 as recently as last month, but it's now down about 13% from its peak. That's not a huge sell-off by any means, but there does appear to be some pushback from investors in paying more for the healthcare stock. That resistance could indicate that the premium is getting too big for investors to stomach.
Analysts who cover the stock, however, still believe there is plenty of upside if you buy now. The consensus price target for Eli Lilly is just under $1,230, which means that if analysts are right, the stock may rise by around 24% from where it is today, over the next year or so. Price targets can change, of course, but by looking at the consensus price target, you can get a good sense of the market's overall appetite for the stock.
Should you buy Eli Lilly stock today?
Eli Lilly's business has been thriving due to the success of its popular GLP-1 drugs, Zepbound and Mounjaro. Last year, its revenue totaled more than $65 billion, rising by 45% from the previous year. That's a highly impressive growth rate for such a massive pharmaceutical company. Eli Lilly's market cap is around $900 billion, making it the most valuable healthcare business in the world.
With strong growth prospects and a dominance in the GLP-1 market, this can still be a good buy today, particularly if you're looking to hold on to the stock for years. While you might benefit from waiting for a lower price, there's no guarantee that Eli Lilly stock will continue sliding in value. For a quality, high-growing business, you'll often need to pay a premium for the stock, and with Eli Lilly, it certainly looks to be justifiable.
Should you buy stock in Eli Lilly right now?
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
