How large a positive surprise could the two drugs deliver?

  • Citi expects Mounjaro sales of 10.4 billion dollars in the third quarter of 2026, up 59% year over year and 343 million dollars above the Visible Alpha consensus; it expects Zepbound sales of 5.2 billion dollars, up 46% year over year and 196 million dollars above consensus.
  • The two drugs are expected to contribute combined sales of 15.6 billion dollars, the main basis for Citi’s assessment of Eli Lilly’s growth this quarter. Including research and development expenses for products in development, the bank expects third-quarter non-GAAP earnings per share of 7.27 dollars, 1.02 dollars above consensus.

Where will additional sales come from?

  • Citi sees demand outside the United States and the Medicare BRIDGE program as sources of incremental sales. The report says approximately 700 thousand older adults have started using GLP-1 drugs since 1 July, with Eli Lilly accounting for about 70% of them; Citi believes this provides an early indication that the market is expanding.
  • Zepbound reentered the CVS drug formulary on 1 October. Citi is watching how much commercial-channel sales this change will generate in the fourth quarter, as well as pricing and patient access for the two flagship drugs.

How will the new oral drug and other products contribute?

  • Citi expects third-quarter sales of the oral drug Foundayo to reach 280 million dollars, 50 million dollars above the Visible Alpha consensus. The bank is monitoring growth in new prescriptions, patient dose escalation, out-of-pocket demand, activity through LillyDirect and inventory buildup outside the United States.
  • Growth in new products is accompanied by declines in mature products: Citi expects third-quarter Jardiance sales of 844 million dollars, down 12% year over year; and Trulicity sales of 823 million dollars, down 22% year over year.
  • Citi is also watching the timing of US approval of Foundayo for type 2 diabetes and the performance of products outside cardiometabolic diseases.

What are Citi’s valuation and key constraints?

  • Citi maintains its Buy rating on Eli Lilly and its 1600 dollar price target. The target is based on a discounted cash flow model with an explicit forecast period through 2035, a weighted average cost of capital of 6% and a perpetual growth rate of 2.6%.
  • Downside factors cited by Citi include adverse events associated with Mounjaro or Zepbound affecting adoption and proposed US rebate reform lowering barriers to entry for competitors; starting in 2032, generic semaglutide could also affect the tirzepatide portfolio through formulary step-therapy requirements.