Bernstein maintains Outperform on LLY with a 1,385 USD price target; the key focus is the long-term GLP-1 market and Lilly's share advantage.

Overview

This is a Bernstein company research report on Eli Lilly & Co, focused on updating the GLP-1/incretin market model. The model uses both TRx revenue estimates and patient-level penetration assumptions, covers 2026 through 2035, and incorporates type 2 diabetes, obesity/overweight, oral versus injectable product mix, payer access, product share, and net pricing. The report has an overall positive view, believing that Lilly remains a leader in the GLP-1 market.

Core views

The core view is that the long-term opportunity in the US GLP-1 market is substantial, with the branded market expected to reach approximately 102 billion USD by 2031 and Lilly expected to capture approximately 70% share. Mounjaro and Zepbound remain the primary revenue drivers and are expected to account for approximately 63% of Lilly's GLP-1 revenue in 2031; new products including Foundayo, Retatrutide, and Eloralintide will gradually contribute the remaining approximately 37%. The report also emphasizes the growth opportunity from low penetration in overseas markets, particularly the potential for Foundayo to generate above-consensus contributions after launching in multiple markets around 2027.

Analysis framework

The report evaluates the GLP-1 opportunity through a dual-path market model: one path estimates market size and company share from TRx and revenue, while the other derives long-term TAM from patient numbers, indication penetration, adherence, administration format, payer channel, and net pricing. Valuation uses an equal-weighted blend of DCF and P/E multiple methods. DCF assumptions include a 7.6% WACC, 5% FCFF CAGR through 2043, and a 3.0% terminal growth rate; the multiple method uses 28x P/E on FY27E adjusted EPS.

Methodology notes

• Market modelTRx and patient-level GLP-1 model

  Estimate long-term market size using prescription trends and patient penetration together.

  The model incorporates TRx revenue estimates, penetration among type 2 diabetes and obesity/overweight patients, oral versus injectable product mix, payer access, product share, and net pricing assumptions.

• Valuation methodBlended DCF and P/E multiple valuation

  Derive the price target using discounted cash flow and comparable multiples together.

  The report equally weights a DCF valuation and a 28x P/E multiple applied to FY27E adjusted EPS to derive a 1,385 USD price target.

• Sensitivity analysisPolicy, pricing, penetration, and pipeline sensitivity

  Identify the variables most likely to change the conclusions of the long-term GLP-1 model.

  Key variables include the expansion of Medicare/Medicaid coverage, net price erosion, the launch and adoption pace of oral products, adherence, pipeline differentiation, patent/generic dynamics in the 2030s, and capacity.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• LLY.N

  Core covered asset; the report assigns it an Outperform rating.

  Strengths

  Deep GLP-1/incretin portfolio, strong share for Mounjaro and Zepbound, and expansion potential from subsequent pipeline assets including Foundayo and Retatrutide.

  Weaknesses

  The valuation already reflects high growth expectations and is sensitive to assumptions regarding long-term penetration, pricing, and pipeline differentiation.

  Comparison

  The report believes Lilly is a leader in both the US and international incretin markets, with approximately 70% US market share in 2031.

  Risks

  Payer access, net price declines, capacity, competition, 2030s LOE/generics, and high-risk M&A/R&D could create downside.

• Mounjaro

  One of the primary revenue drivers in Lilly's GLP-1 portfolio.

  Strengths

  Strong share position in the T2D market, with overseas adoption assumptions revised upward.

  Weaknesses

  The short-term model was reset somewhat due to commentary on pricing and prescription trends.

  Comparison

  The report expects Mounjaro and Zepbound together to continue contributing the majority of Lilly's GLP-1 revenue in 2031.

  Risks

  Pricing pressure, competing drugs, and limited transparency in overseas market data.

• Zepbound

  The main product in Lilly's obesity/overweight GLP-1 opportunity.

  Strengths

  The report expects it to retain a majority share of the obesity and overweight GLP-1 market through 2035.

  Weaknesses

  The short-term outlook was slightly reduced due to pricing and factors including CVS formulary changes.

  Comparison

  Compared with future competitors, the report believes its long-term differentiation remains supported.

  Risks

  Obesity TAM, reimbursement, adherence, Amylin-class competition, and price elasticity.

• Foundayo

  An important component of Lilly's subsequent oral and new-product opportunity.

  Strengths

  The report is positive on its ex-US opportunity and expects overseas sales to be significantly above consensus.

  Weaknesses

  US launch expectations were lowered; the report believes results would be better if management pursued a more aggressive US launch.

  Comparison

  The report believes the market may underestimate its contribution from diabetes indications; approximately 47% of its US forecast revenue in 2031 is related to diabetes indications.

  Risks

  The adoption pace of oral products, regulatory approval, brand competition, and acceptance of medication restrictions.

• Retatrutide

  An important high-efficacy asset in Lilly's long-term incretin pipeline.

  Strengths

  The high-efficacy drug is expected to create differentiation in the long-term market and contribute approximately 11% of Lilly's incretin revenue in 2031.

  Weaknesses

  Long-term forecast error increases as assumptions extend further into outer years.

  Comparison

  The report's prior forecast was already above consensus; this update primarily reflects adjustments to the overall model.

  Risks

  Clinical, regulatory, competitive, and commercialization execution risks.

Key data

• US branded GLP-1 market sizeApproximately 102 billion USD, 2031EThe report estimates that Lilly will capture approximately 70% share.
• LLY price target1,385.00 USDCorresponds to an Outperform rating; the closing price was 1,181.87 USD.
• Implied upside17%Based on the closing price on July 13, 2026.
• T2D GLP-1 penetrationApproximately 44%, 2031EContinues to increase from approximately one-quarter of patients using incretins previously.
• Obesity/overweight GLP-1 penetrationApproximately 23%, 2031ERemains below T2D, mainly due to limitations in access, reimbursement, adherence, and affordability.
• Peak oral GLP-1 shareApproximately 22%, 2029EInjectables will still account for approximately 79% or more of market value after 2030.
• Mounjaro and Zepbound revenue shareApproximately 63%, 2031EThey remain the primary contributors to Lilly's GLP-1 revenue.
• New product revenue shareApproximately 37%, 2031EIncludes Foundayo, Retatrutide, Eloralintide, and others.
• Foundayo ex-US forecast vs consensus2027E: 7.1B vs 1.9B; 2028E: 11.7B vs 4.6BThe report believes low overseas penetration and product ramp-up support forecasts above consensus.
• Mounjaro ex-US revenue forecast2026E: 19.7B; 2027E: 23.7B; 2028E: 25.6BReflects higher overseas adoption assumptions.

Impact & implications

The investment implication is that LLY's long-term valuation support comes primarily from GLP-1 market size, sustained share, and portfolio expansion rather than from a single-product cycle. If US coverage expansion, overseas ramp-up, and new-product differentiation materialize, Lilly's revenue and profit growth should remain sustainable; however, worsening price erosion, policy access, competitive products, or capacity constraints would create downside risk to the long-term TAM and share assumptions.

Risks

• Demand, regulatory, pricing, competition, and compounding pressure in the obesity TAM may be higher than expected.
• The expansion of Medicare/Medicaid coverage and the penetration pace of the Bridge/Balance models remain uncertain.
• Net price erosion and rebate pressure could reduce long-term revenue.
• The launch timing, adoption pace, and overseas approvals of oral GLP-1 products remain uncertain.
• If patient persistence/adherence assumptions prove overly optimistic, long-term patient numbers and revenue could be revised downward.
• A stall in capacity expansion could constrain the ramp-up of Lilly's obesity business.
• The semaglutide patent cliff and low-priced generics in the 2030s could change the market pricing structure.
• High-risk M&A or R&D initiatives could destroy value.

What to watch

• Actual uptake following the deployment of Bridge on July 1, 2026, and whether 2027 becomes the channel's primary growth year.
• The subsequent rollout scope, pricing, and covered population of the BALANCE model.
• Foundayo's approval, launch timing, and diabetes-indication contribution in the US and overseas markets.
• Whether Mounjaro ex-US sales continue to exceed expectations, particularly the realization of 2026E-2028E revenue.
• Pricing and prescription trends following Zepbound's CVS formulary adjustments.
• The share shift between oral GLP-1 products and injectables, particularly whether oral products approach the approximately 22% peak around 2029.
• Clinical and commercialization progress for high-efficacy pipeline assets such as Retatrutide.
• Whether US and overseas net price ranges decline from the current approximately 200-500 USD to approximately 100-250 USD by 2035.