The thesis

Eli Lilly is a leading global pharmaceutical firm with a strong presence in diabetes and obesity treatments. The company's revenue grew 47.7% year-over-year, driven by Zepbound and Mounjaro sales. With a conviction score of 39/100, it is on the WATCHLIST. Gross margin is 83.4% and net margin is 33.53%, indicating strong profitability.

Why now

US Zepbound revenue grew 122% year-over-year in Q4 2025, indicating sustained demand for Eli Lilly's GLP-1 drugs. The current macro context, with the S&P 500 up 13% six months into the Iran War, suggests a relatively stable market environment.

What to watch

Revenue growth trajectory and gross margin sustainability over the next 1-3 quarters will be key indicators of Eli Lilly's continued success. The competitive landscape and potential new entrants in the GLP-1 market will also be important to monitor.

Key risks

Valuation risk is high with a P/E ratio of 38.5x and competitive pipeline risk from other pharmaceutical firms. Execution risk is also present as the company needs to continue innovating and commercializing its products successfully.

Theme exposure