Eli Lilly (LLY Quick QuoteLLY - Free Report) and Johnson & Johnson (JNJ Quick QuoteJNJ - Free Report) are two leading U.S.-based healthcare companies with strong positions across the pharmaceutical and biotech industries.

Both companies have significant exposure to oncology, immunology and neuroscience. J&J’s business is more diversified, with treatments targeting cardiovascular and metabolic conditions, pulmonary hypertension and infectious diseases, along with a sizable medical devices operation. Lilly, meanwhile, has built a leading position in cardiometabolic care, fueled by its GLP-1 portfolio, with Mounjaro and Zepbound serving as major growth engines.

Both companies continue to deliver strong revenue and earnings growth and have promising long-term prospects. However, which stock presents the more attractive investment opportunity at current levels? An assessment of their fundamentals, growth potential, valuations and key risks can help determine which one offers the better risk-reward profile.

The Case for Lilly Stock

Lilly has seen extraordinary momentum in its cardiometabolic franchise. Its blockbuster drugs, Mounjaro for type II diabetes and Zepbound for obesity, have become some of the fastest-growing medicines in pharmaceutical history, gaining from enormous global demand for GLP-1 therapies. These therapies account for around 65% of the company’s total revenues and have become key top-line drivers for Lilly, with demand rising rapidly. In the first half of 2026, the drugs generated combined sales of $27.6 billion.

Lilly’s newly launched once-daily oral GLP-1 pill, Foundayo (orforglipron), for treating obesity, can prove to be a commercial game-changer for Lilly. Oral pills will be a more convenient alternative to the currently available once-weekly injectable obesity treatments like Zepbound and rival Novo Nordisk’s (NVO Quick QuoteNVO - Free Report) Wegovy. Foundayo's launch uptake has been encouraging as Lilly expands physician engagement and direct-to-consumer promotion in the United States.

To maintain leadership in the GLP-1 market, Lilly is developing several next-generation, more powerful and more convenient GLP-1–based treatments, including oral options and multi-acting candidates. Retatrutide is one of Lilly’s most important late-stage pipeline candidates, targeting GLP-1, GIP and glucagon pathways and potentially delivering greater weight loss and broader metabolic benefits than current therapies. With late-stage studies spanning obesity, type II diabetes, obstructive sleep apnea (OSA) and other indications, Lilly plans to seek FDA approval in the first quarter of 2027, potentially creating another multibillion-dollar growth driver.

Lilly’s growth story is increasingly diversified beyond its GLP-1 franchise, with newer therapies such as Omvoh, Jaypirca, Ebglyss, Kisunla and Inluriyo gaining traction across multiple therapeutic areas. These products are becoming meaningful growth contributors.

The company has also embarked on an aggressive M&A spree in the past couple of years, acquiring biotech companies across oncology, neuroscience, cardiovascular disease, gene editing, inflammation, cell therapy and vaccines to diversify its long-term growth drivers beyond GLP-1 therapies. The company has announced around 10 small biotech M&A deals this year.

Lilly has its share of problems. Prices of most of Lilly’s products are declining in the United States.  Price is expected to continue to be a drag on top-line growth in the low- to mid-teens percentage in 2026. Rising competition in the GLP-1 diabetes/obesity market is a key headwind. Also, sales of late-life cycle products like Trulicity, Taltz and Verzenio are expected to be flat to down in 2026.

The Case for J&J Stock

J&J’s biggest strength is its diversified business model, operating through pharmaceuticals and medical devices divisions, which reduces dependence on any single product or market. It has more than 275 subsidiaries and boasts 28 platforms or products with more than $1 billion in annual sales, with the aim of adding even more. Its diversification helps it to withstand economic cycles more effectively. It also boasts strong cash flows and has increased its dividends for 64 consecutive years. J&J believes the depth of its portfolio and pipeline is stronger than ever.

J&J’s Innovative Medicines segment is the company’s primary growth engine. Innovative Medicine segment sales rose 6.2% organically in the first half of 2026, despite the loss of exclusivity (LOE) of the blockbuster drug, Stelara. Growth was driven by J&J’s key drugs like Darzalex, Erleada and Tremfya. New drugs like Carvykti, Tecvayli, Talvey, Rybrevant and Spravato also contributed significantly to growth.

J&J’s MedTech growth slowed in the second quarter, reflecting weakness in Cardiovascular, particularly Abiomed due to slow procedure volumes, and continued China VBP headwinds.

J&J’s new cancer drugs, Carvykti, Tecvayli, Talvey and Rybrevant/Lazcluze are contributing significantly to top-line growth, driven by market share gains. Its recent pipeline launches, including Inlexzo, Imaavy and Icotyde, are gaining traction and could become significant growth drivers in future quarters.

J&J believes 10 of its new products in the Innovative Medicine segment have the potential to reach peak sales of $5 billion, including Talvey, Tecvayli, Imaavy, Caplyta, Inlexzo, Rybrevant, plus Lazcluze and Icotyde.

J&J expects 2026 to be a year of accelerated growth. The company is confident that it can achieve its target of generating more than $100 billion in revenues in 2026 with $49.4 billion already generated in the first half. It expects sales to continue to improve in 2027, with a “line of sight” to double-digit growth by the end of the decade. J&J believes that it is already achieving this growth. Though J&J’s total revenues are currently rising in a mid-single-digit range, excluding Stelara, J&J’s top line grew in a double-digit range in both the first and second quarters of 2026.

J&J also expects its MedTech business to do better in the second half of the year compared with the first, driven by strength in Vision, Orthopedics, Surgery and better performance in Cardiovascular. While the Abiomed softness creates a new overhang, it accounts for less than 2% of sales, and J&J has other top-line drivers to compensate.

However, J&J faces its share of headwinds, including the Stelara patent cliff, the upcoming LOE of key drugs Opsumit and Simponi, and softness in MedTech. The legal battle surrounding its talc lawsuits is another headwind. Though the issue is close to resolution, it has not yet been fully resolved.

How Do Estimates Compare for LLY & JNJ?

The Zacks Consensus Estimate for LLY’s 2026 sales and EPS implies a year-over-year increase of 35.4% and 48.4%, respectively. The Zacks Consensus Estimate for 2026 has risen from $35.56 to $35.93 per share over the past 60 days, while that for 2027 has risen from $44.58 to $45.93 per share over the same timeframe.

LLY Estimate Movement

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The Zacks Consensus Estimate for J&J’s 2026 sales and EPS implies a year-over-year increase of 7.3% and 7.4%, respectively. The Zacks Consensus Estimate for 2026 earnings has risen from $11.58 to $11.59 over the past 60 days, while that for 2027 earnings has gone up from $12.65 per share to $12.80 over the same time frame.

JNJ Estimate Movement

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Price Performance and Valuation of LLY & JNJ

So far this year, LLY’s stock has risen 6.9% and J&J’s stock has surged 33%. The industry has jumped 14.5% in the same time frame.

Image Source: Zacks Investment Research

J&J looks more attractive than Lilly from a valuation standpoint. Going by the price/earnings ratio, Lilly’s shares currently trade at 26.87 forward earnings, significantly higher than 18.71 for the industry. However, LLY’s stock is trading below its 5-year mean of 34.57. J&J’s shares currently trade at 22.16 forward earnings, higher than the industry as well as the stock’s 5-year mean of 15.65.

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J&J’s dividend yield is around 2%, while Lilly’s is around 0.6%.

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LLY or JNJ: Which is a Better Pick?

J&J enjoys a diversified revenue base, a large cash-generating business and a long history of returning capital to shareholders. It is witnessing steady sales and earnings growth, continued strength in its Innovative Medicine business, and improving fundamentals and outlook. Despite several headwinds, J&J looks quite confident that it will be able to navigate these challenges.

Lilly remains one of the most compelling growth stories in the pharmaceutical industry, supported by its significant price appreciation, dominant position in the rapidly expanding obesity and diabetes markets, a diversified late-stage pipeline and strong financial performance.

Choosing between Eli Lilly and J&J is probably the most difficult choice to make among large drug stocks. Both have seen steady growth in sales and earnings, rising stock prices and analyst estimates and have an optimistic outlook for future growth. Additionally, continued pipeline advancements, favorable regulatory developments, and strategic M&A activity have strengthened investor sentiment for both stocks.

Both stocks have a Zacks Rank #3 (Hold). However, we are selecting Lilly over J&J as the stock offers a substantially stronger long-term earnings-growth opportunity. While JNJ’s share price movement and valuation are slightly better, LLY’s long-term growth prospects remain among the strongest in the healthcare sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.