Bernstein: Eli Lilly raises full-year revenue guidance as weight-loss drug demand stays strong, while new oral drug gets off to a slower start

How much of the third-quarter beat came from real demand?

Eli Lilly reported third-quarter 2026 revenue of 24.4 billion dollars, up 39% year over year and about 1.9 billion dollars above market consensus. About 900 million dollars came from favorable items, including a 410 million dollar Jardiance milestone payment and approximately 300 million dollars in adjustments to US rebate and discount estimates. Excluding these items, revenue still exceeded consensus by about 1 billion dollars.
The company raised its 2026 revenue guidance from 85 billion–87 billion dollars to 91 billion–92 billion dollars, mainly attributing the increase to stronger incretin drug demand in the US and international markets. Bernstein raised its full-year revenue forecast by 2.45 billion dollars to 92.5 billion dollars.
About 2 billion dollars in 2026 revenue is not expected to recur the following year, mainly milestone payments and adjustments to rebate and discount estimates, weighing on reported revenue growth in 2027.

Combined third-quarter revenue for Mounjaro and Zepbound was 16.1 billion dollars, up about 6 billion dollars year over year. The international incretin market grew 53% year over year, and Eli Lilly’s share rose about 4 percentage points from the previous quarter to 58%. Having established leadership in several markets, the next phase of growth depends more on expanding the treated population.
Since July, more than 500 thousand patients have received prescriptions for Eli Lilly obesity drugs through the Medicare Bridge program. About 80% had not previously used incretin drugs, up from about 60% to 70% in the program’s early days. Bernstein therefore believes the program is mainly expanding the market rather than merely moving existing patients to a new channel.
The trade-off is lower channel pricing. Eli Lilly expects commercial insurance channel access to remain broadly stable in 2027, but faster growth in Medicare, Medicaid and self-pay channels will lower the average net price. Bernstein believes sales volume from new patients could outweigh the effect of lower revenue per prescription.

Third-quarter revenue for the oral drug Foundayo was 184 million dollars, below market consensus of 231 million dollars. US revenue was 124 million dollars, below consensus, while overseas revenue of 59 million dollars exceeded consensus. Bernstein consequently lowered its full-year Foundayo revenue forecast.
About 90% of current US demand comes from self-pay patients. Eli Lilly believes the diabetes indication can become a new growth pillar, but broader reimbursement coverage is expected to take 12 to 18 months. The company also expects long-term treatment persistence for oral drugs to be lower than for weekly injections.
Bernstein expects Foundayo revenue outside the US to reach 7 billion dollars in 2027; that estimate depends on launches for the obesity indication in most countries in the first quarter.

The non-GAAP operating performance margin was 54.2% in the third quarter, up about 6 percentage points year over year. Management believes the current level is broadly sustainable after excluding volatility from acquired in-process research and development expenses, but the company will continue to invest incremental earnings in R&D, launch support and manufacturing rather than pursue a near-term margin peak.
Eli Lilly expects to submit a biologics license application for retatrutide in obesity in the first quarter of 2027. With EloraTZP entering phase three development, the key question is whether it can improve tolerability while maintaining efficacy. The company plans to present more pipeline programs at its innovation day on 7 December.
Bernstein maintained its Outperform rating and 1450 dollar price target on Eli Lilly.