JPMorgan raises Eli Lilly's Dec-26 target price to $1,400 and reiterates Overweight

Overview

This is a JPMorgan 2Q26 earnings preview for Eli Lilly & Company. Ahead of the company's August 5 earnings release, the report provides quarterly sales and EPS forecasts above market consensus and raises the Dec-26 target price from $1,300 to $1,400 while reiterating Overweight. The core view is that the ramp-up of Mounjaro in international markets, US Zepbound demand, and next-generation obesity/diabetes pipeline assets will continue to support Eli Lilly's leading position in the $200bn+ incretin market.

Core views

The report's core views include: first, 2Q26 sales and EPS are expected to exceed consensus, with approximately 50% year-over-year growth in the GLP-1 business as the primary driver; second, although gross margin is expected to contract by approximately 180bps year over year, operating expense leverage should drive operating margin expansion to approximately 47.5%; third, FY26 results are expected to be at the high end of company guidance, and the company may raise its sales and EPS guidance again; fourth, international Mounjaro sales and the rollout of US Zepbound through Medicare channels are the primary sources of upside; fifth, clinical catalysts including elora + tirzepatide, Phase 3 results for retatrutide, and monotherapy data for eloralintide could strengthen the next-generation product portfolio.

Analysis framework

The report combines an earnings preview, product sales breakdown, margin bridge, full-year guidance comparison, consensus variance analysis, and DCF valuation. The analysis focuses on the contributions of Mounjaro, Zepbound, Foundayo, and pipeline assets to revenue, EPS, and the target price.

Methodology notes

• Valuation methodsDCF

  discounted cash flow valuation

  The Dec-26 target price of $1,400 is based on a DCF methodology incorporating forecast-period cash flows, decay assumptions for existing product businesses, and risk-adjusted contributions from pipeline assets; key assumptions include an 8.5% WACC and a 2.5% perpetual growth rate.

• earnings_previewconsensus_comparison

  consensus variance analysis

  The report compares JPMorgan's 2Q26 and FY26 sales and EPS forecasts with market consensus and company guidance to identify potential earnings upside.

Asset mapping & comparison

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

• LLY.N / US.LLY

  Core equity asset covered by the report

  Strengths

  Strong growth in Mounjaro and Zepbound, a large GLP-1 market opportunity, dense pipeline catalysts, and relatively limited LOE risk over the next 10-plus years.

  Weaknesses

  Some non-incretin businesses, such as Verzenio and Taltz, face competitive pressure and Medicaid-related pricing pressure.

  Comparison

  JPMorgan describes Eli Lilly as its top pick within its coverage universe and believes it holds a leading position in the $200bn+ incretin market.

  Risks

  Diabetes and obesity business growth below expectations, intensifying competition, regulatory and drug pricing pressure, and major pipeline failures.

Key data

• 2Q26 sales forecast$20.7bnApproximately $300mm above consensus.
• 2Q26 EPS forecast$8.85Approximately $0.13 above consensus.
• FY26 sales forecast$85.0bnAt the high end of company guidance of $82bn-$85bn and broadly in line with consensus.
• FY26 EPS forecast$36.60Approximately $0.27 above consensus and within the $35.50-$37.00 guidance range.
• 2Q26 international Mounjaro sales forecast$4.6bnThe report considers this assumption conservative, given that international markets remain in the early penetration stage.
• FY26 international Mounjaro sales forecast$18.7bnThe ramp-up of the international obesity business is viewed as a key source of upside.
• 2Q26 global Mounjaro sales forecast$8.9bnUS T2D share is approximately 55%, up approximately 270bps sequentially.
• FY26 global Mounjaro sales forecast$36.8bnMounjaro remains the core product driving full-year revenue growth.
• 2Q26 US Zepbound sales forecast$4.7bnApproximately $140mm above consensus, driven by nearly 90% year-over-year growth in US injectable market TRx.
• 2Q26 operating margin forecastapproximately 47.5%Up approximately 160bps year over year, as operating leverage offsets gross margin contraction.
• Target price$1,400.00Raised from the previous target of $1,300.
• Current share price$1,200.06Price as of July 6, 2026.

Impact & implications

If JPMorgan's view materializes, Eli Lilly's near-term results may continue to outperform consensus and provide a basis for management to raise FY26 guidance; over the medium to long term, Mounjaro, Zepbound, and next-generation incretin pipeline assets could further strengthen the company's competitive advantage in the obesity and diabetes treatment markets, supporting high growth and a premium valuation.

Risks

• Growth of diabetes and obesity products falls below expectations.
• Competitive pressure intensifies, particularly in non-incretin businesses and the obesity/diabetes markets.
• Drug pricing pressure from US federal regulation and the Inflation Reduction Act is higher than expected.
• Clinical failure or worse-than-expected tolerability data for major pipeline assets.
• Pricing dynamics for Zepbound and Mounjaro in Medicare and commercial channels could pressure revenue and margins.

What to watch

• Whether the 2Q26 results announced on August 5 exceed consensus expectations.
• Whether management raises FY26 sales and EPS guidance again.
• The sequential ramp-up pace of international Mounjaro sales and changes in ex-US market share.
• Pricing and volume changes for US Zepbound in Medicare and cash-pay channels and following CVS formulary inclusion.
• Elora + tirzepatide data expected in late September at EASD, particularly tolerability data.
• Potential changes to Mounjaro Medicare pricing in 2027.
• The pace of Foundayo's volume ramp following its full launch in more than 40 international markets in 4Q26 and beyond 2027.