Is Eli Lilly & Co. overvalued or undervalued?

As of 12 September 2025, Eli Lilly & Co. has moved from fair to expensive in its valuation grade. The company is currently considered overvalued, as indicated by its high P/E ratio of 47, a Price to Book Value of 46.31, and an EV to EBITDA of 35.51. In comparison, peers such as Johnson & Johnson have a P/E of 26.18, and AbbVie, Inc. has a P/E of 25.28, highlighting Eli Lilly's premium valuation relative to its industry.
Despite a strong ROE of 97.65% and a PEG ratio of 0.87, which suggests growth potential, the valuation ratios indicate that the stock is priced significantly higher than its peers. Additionally, while Eli Lilly has outperformed the S&P 500 over the 3-year and 5-year periods with returns of 146.99% and 394.86% respectively, it has lagged in the 1-year and year-to-date comparisons, with returns of -15.70% and -1.17%. This performance underscores the concerns regarding its current valuation amidst a broader market context.