LLY

Eli Lilly is firing on every cylinder. FY2025 revenue jumped 44.7% to $65.2B and net income nearly doubled (+94.9%) to $20.6B, lifting diluted EPS 96% to $22.95. The MD&A is explicit about the engine: growth was driven by volume in Mounjaro and Zepbound (tirzepatide), with net income gaining on 'higher gross margin.' That operating leverage — earnings growing more than twice as fast as revenue — shows up in a 31.7% net margin and an extraordinary 77.8% ROE. The four-year arc is just as telling: revenue went from $28.3B (FY2021) to $65.2B (FY2025) while net income climbed from $5.58B to $20.6B. Operating cash flow of $16.8B (+90.7%) confirms the earnings are real, funding $4.11B of buybacks and $5.38B of dividends.

The stock is undeniably expensive — 47.9x trailing earnings and 15.9x sales for a $1.04T company. But valuation has to be read against growth: at 96% EPS growth the earnings multiple is well under 1x on a PEG basis, and ~1.1x against 44.7% revenue growth. This is a great company at a full price, not a great company priced for perfection. The differentiator is the pipeline: orforglipron, an oral GLP-1, is already submitted in the U.S., EU and Japan for obesity and type 2 diabetes (and carries an FDA Commissioner's National Priority Voucher), while retatrutide's Phase 3 program 'met all primary and key secondary endpoints.' An oral incretin pill could expand the addressable market well beyond today's injectables, and recent approvals (donanemab/Kisunla in Alzheimer's, mirikizumab/Omvoh, imlunestrant, pirtobrutinib) diversify the story beyond cardiometabolic.