Eli Lilly Stock: Congress Is Selling — But Is It Time for You to Buy?

$Eli Lilly(LLY)$

As part of our ongoing investigation into congressional trading activity, the next company on our radar is one of America’s pharmaceutical crown jewels: Eli Lilly & Co. (NYSE: LLY).

Now, if you've been tracking the healthcare sector even loosely over the last few years, you’ll know Eli Lilly isn’t just any drugmaker — this is a company at the forefront of a revolution in obesity, diabetes, and oncology treatment, and one that has outpaced nearly every peer in its class.

But despite that strong long-term performance, members of Congress — those who often have early access to critical regulatory and legislative information — have been selling shares in Eli Lilly.

So what’s going on here? Are lawmakers taking profits? Is there policy risk ahead? Or is this just noise in an otherwise strong long-term story?

Let’s take a deep dive into the business fundamentals, price action, valuation, and insider activity to figure out whether LLY still belongs in your portfolio, or if it’s time to trim.

Performance Snapshot: A Long-Term Winner, Near-Term Under Pressure

Looking at the most recent stock performance, LLY is down roughly 7% over the last 12 months, despite being up around 6% in 2025 year-to-date. These modest moves bely the company’s extraordinary long-term success.

Over the last decade, Eli Lilly shares have exploded over 890%, utterly dwarfing the S&P 500’s 217% return over the same stretch. That makes LLY one of the top-performing megacap stocks of the last 10 years — a truly elite status usually reserved for the likes of Nvidia, Apple, and Amazon.

But that growth has come at a cost: valuation.

As of today, LLY trades in the lower-to-middle portion of its 52-week price range, suggesting that market enthusiasm has cooled. This could be setting up an opportunity — or it might be a sign of stretched fundamentals finally catching up to investor exuberance.

Let’s look deeper into how the valuation and sentiment stack up.

Valuation: A Premium Name, Trading Slightly Below Historical Norms

Let’s begin with forward valuation metrics:

• Forward Price-to-Earnings (P/E): 32.7x

• 5-Year Historical Forward P/E Average: 37.7x

• Implied Discount: ~13%

By that measure, you could argue Eli Lilly is actually trading at a discount to its own historical average, a rare occurrence given how richly it’s usually priced.

However, one could counter this with a look at the dividend yield:

• Current Dividend Yield: 0.73%

• 5-Year Average Yield: 1.2%

This suggests that, even with a P/E lower than historical norms, the yield is still quite suppressed, implying that the stock is expensive relative to its payout — often a red flag for conservative income-oriented investors.

So we have a valuation split:

• On one hand, P/E looks mildly attractive compared to history.

• On the other hand, yield compression indicates continued overvaluation.

But valuation only matters in context of growth. And this is where Eli Lilly truly separates from the pack.

Explosive Growth: Far Above Sector and Historical Norms

Eli Lilly isn’t just growing — it’s outpacing nearly every peer in both revenue and earnings expansion.

Revenue Growth:

• Past 12 Months (YoY): +36%

• Forward 12-Month Estimate: +28%

• Healthcare Sector Average: +6–8%

• LLY’s Own 5-Year Average: ~19%

That means Eli Lilly is not only growing faster than its peers, but also accelerating relative to its own historical performance. That’s rare for a megacap.

Earnings Per Share (EPS) Growth:

• Expected Annual EPS Growth (Forward): +32%

• Sector EPS Growth Average: ~10%

• LLY 5-Year EPS CAGR: ~22%

Moreover, the company is guiding for double-digit EPS growth every single quarter, with no signs of deceleration despite some near-term volatility. To be clear, the most recent quarter came in below expectations with a $0.12 miss — a rare blemish in an otherwise exceptional streak — but one that hasn’t meaningfully altered long-term projections.

Institutional Activity vs Congressional Selling: A Contradiction

Here’s where the plot thickens.

Despite congressional sales, institutional investors — the so-called “smart money” — are loading up on LLY shares:

• Institutional Ownership: 83%

• Net Institutional Buying Over Past Year: +$83 billion

• Q1 2025 Buying: $71 billion

• Q1 2025 Selling: $11 billion

That is an overwhelming vote of confidence from pensions, endowments, and hedge funds. These aren’t traders looking to flip shares — these are long-term allocators betting big on Eli Lilly’s future.

By contrast, recent congressional disclosures show a different story: lawmakers reducing exposure in LLY over recent quarters. While there’s no evidence of insider trading or wrongdoing, the timing raises eyebrows. Is it just profit-taking after the stock’s massive 10-year run, or do they foresee regulatory risks in healthcare that others are ignoring?

It’s a divergence worth watching.

Intrinsic Valuation: High Expectations Baked In

To answer the most important question — is LLY overvalued or not? — we built a Discounted Cash Flow (DCF) model to estimate fair value under different growth scenarios.

DCF Assumptions:

• Historical FCF Growth (10-Year Average): 44%

• Base Case FCF Growth (Next 10 Years): 35%

• Discount Rate: 10%

• Terminal Growth Rate: 3%

Fair Value Estimates:

Current market prices already exceed our base-case valuation of $691/share, which assumes a very ambitious 35% free cash flow growth CAGR.

That means if growth even slightly underperforms this target, LLY may be trading at a meaningful premium today. And we haven’t even applied a margin of safety yet.

For cautious investors, our suggested buy zones would be:

• 10% Margin of Safety Buy Price: $622

• 20% MOS: $553

• 25% MOS: $519

If you're not willing to bet on long-term 40% FCF growth, LLY may not be worth the current price.

Wall Street Remains Bullish: $1,000+ Price Target

Despite valuation concerns, analysts continue to pound the table.

• Wall Street Consensus Price Target: $1,030

• Implied Upside: ~23%

This bullish view is driven by enthusiasm around the GLP-1 drug class (for weight loss and diabetes), which includes blockbuster candidates like Mounjaro and Zepbound. These could generate tens of billions in annual sales and fundamentally alter the company’s earnings base over the next 3–5 years.

That said, Wall Street has been wrong before. Analyst targets tend to price in best-case scenarios — meaning investors would do well to build in some skepticism.

Key Risks to Watch

1. GLP-1 Competition: While Eli Lilly leads now, rivals like Novo Nordisk are racing to gain market share.

2. Regulatory Pushback: Popular weight loss drugs may face pricing scrutiny or reimbursement changes.

3. Patent Expiry Risk: While not immediate, future loss of exclusivity could impact margins.

4. Execution Risk: Any manufacturing delay or clinical trial miss could dent the valuation premium.

Conclusion: What Should Investors Do With Eli Lilly?

Here’s a summary of what we know:

Conclusion

Eli Lilly is, without question, a world-class business. Its pipeline strength, earnings growth, and financial health are second to none in the pharmaceutical industry. But that strength has also made the stock richly valued, with expectations that leave little room for error.

If you already own shares, it makes sense to hold — and potentially trim into rallies. But if you're looking to initiate a new position, you may want to wait for a pullback into the $600–$550 range to establish a safer long-term cost basis.

At current prices, this is not a high-margin-of-safety investment — unless you’re willing to pay a premium for excellence.

What’s Your Take?

Do you agree with Congress and believe now is the time to take profits in Eli Lilly? Or do you think this is just the beginning of another long-term leg higher?

Let me know your thoughts in the comments, and stay tuned for the next congressional stock spotlight.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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