Eli Lilly vs Novo Nordisk Stock Comparison: Which Healthcare Stock is the Better Buy?

So, healthcare’s on sale—should you grab some?

Honestly, it’s not every day that top-tier healthcare stocks flirt with their 52-week lows. But here we are, and that’s got investors leaning in, rubbing their financial crystal balls and asking: is this a golden buying opportunity…or a value trap?

I’ve looked under the hood of two pharma powerhouses—Eli Lilly and Novo Nordisk. Both are market darlings in their own right, and both are currently rated a steady buy in my book. But when your wallet’s got only so much room, which one deserves a place in your portfolio today?

Let’s walk through this head-to-head, breaking it down with real numbers, real insights, and yes—my DCF models that I geek out over more than I probably should admit. Stick with me. It might be finance, but I promise to keep the caffeine-level energy up.

First up: ROIC — The Drug Kingpin’s Scorecard

For healthcare companies, Return on Invested Capital (ROIC) isn’t just a nice metric—it’s the backbone of long-term success. Think about it: these companies funnel buckets of cash into research and development. Some compounds make it to shelves, some die in trials. But overall? ROIC tells us how wisely they’re using shareholder money to make more money.

So here’s where it gets spicy:

  • Eli Lilly: ROIC now at 27.8%, up from ~12% ten years ago.
  • Novo Nordisk: Also currently at 27.8%—but a decade ago? It was a jaw-dropping ~70%.

See the difference? Both are strong, but Eli Lilly is surging, whereas Novo Nordisk seems to be coasting (if not sliding) downhill. Momentum matters.

Valuation Models — What’s This Stuff Really Worth?

Let’s get to the meat-and-potatoes of what they’re really worth—according to cold, hard math. My DCF models (built from the ground up, not spoon-fed), suggest some eyebrow-raising undervalued stickers on both these names.

Novo Nordisk: A Quiet Bargain?

  • Intrinsic Value: $150/share
  • Current Price: $64/share (near 52-week low of $57)
  • 52-Week High: $148/share
  • Weighted Average Cost of Capital (WACC): 8.15%
  • Beta: 0.67 — low volatility
  • ROIC/WACC Ratio: Over 2:1 — pretty attractive

It’s like walking by a luxury coat that’s 60% off and wondering if it’s too good to be true. (Hint: Smaller crowd doesn’t always mean it’s a bad deal.)

Eli Lilly: Quietly Gunning for Market Takeover

  • Intrinsic Value: $1,039/share
  • Current Price: $757/share
  • 52-Week Low: $677/share
  • WACC: 7.36%
  • Beta: 0.48 — even less volatile than Novo’s
  • ROIC/WACC Ratio: ~4:1 — which is impressive by any standard

The price tag’s higher, no doubt, but the fundamentals are rock-solid. You’re paying more because, put simply, you’re getting more.

PE Ratios — The ‘How Much Are People Willing to Shell Out’ Gauge

Next stop on the valuation express: Forward Price-to-Earnings (PE) Ratios. This one reflects investor sentiment—how much optimism (or pessimism) is priced into a stock’s future earnings.

  • Novo Nordisk: Forward PE of 16 — a bit of a steal, honestly
  • Eli Lilly: Sits at 29 — nearly double, yet dipped from recent months

So, Novo’s cheaper by traditional valuation aesthetics. But again, think about why: investors are skeptical about growth and market positioning. Eli Lilly? Investors are lining up for what’s next in its pipeline, which, while we didn’t discuss in depth here, is firing on all cylinders.

In Case You’re Wondering: Why Healthcare Stocks Stay Steady During Storms

Let me explain—because this is important. Healthcare stocks generally have low beta for a reason. Think about it: when the economy tanks, folks don’t stop needing insulin or cancer treatment. Unlike a Tesla (where demand is tightly linked to how cushy someone’s checking account looks), healthcare is a need, not a want.

That’s why Novo and Eli Lilly have such comforting beta numbers—0.67 and 0.48 respectively. These companies hum along even when other businesses are spiraling.

And the Winner Is…

If you forced me to choose between the two—I’m going with Eli Lilly. Why?

  • ROIC is not only strong but steadily getting stronger
  • Its ROIC/WACC ratio leaves Novo’s numbers in the rearview mirror
  • While pricier in dollar terms, its growth engine is accelerating
  • Lower volatility = smoother ride

But—and it’s a crucial ‘but’—Novo is nothing to sneeze at. In fact, if you’re looking for an undervalued entry point with future upside, Novo’s in the ‘smart bet’ category too.

So, you really can’t lose with either… but if you’re playing long-term ball and looking for one stock to rule your healthcare allocation, Eli Lilly’s the ticket.

Where to Get More Tools and Analysis

Pro tip: If you want access to the valuation data and tools I use—including DCF calculators, financial forecasting dashboards, and market insights—check out FinchHat.io. If you click that affiliate link, you get a free two-week trial and a discount if you go full throttle.

FAQ — Let’s Recap the Highlights

1. Which stock has a stronger ROIC trend?

Eli Lilly has improved its ROIC dramatically over the past decade—from 12% to 27.8%—while Novo Nordisk has declined from nearly 70% to the same 27.8%.

2. Which stock is valuation-wise cheaper right now?

Novo Nordisk has a lower current price and PE ratio, suggesting it’s cheaper based on traditional valuation metrics. But that may reflect lower growth expectations.

3. What makes Eli Lilly a more attractive long-term stock?

Higher ROIC, lower volatility, a stronger ratio of ROIC to WACC, and a robust drug pipeline make it a more compelling pick for long-term investors.

4. Are healthcare stocks safer during economic downturns?

Yes. Due to low correlation with economic cycles, healthcare demand remains stable, making stocks like Eli Lilly and Novo Nordisk less volatile and more resilient.

5. Where can I get more in-depth analysis tools?

Try FinchHat.io for stock valuation tools. I use it myself, and if you use my link, you’ll get a free trial and discount.

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