Critical Review: Eli Lilly and Company (NYSE:LLY) versus AbbVie (NYSE:ABBV)

Eli Lilly and Company (NYSE:LLY) and AbbVie (NYSE:ABBV) are both large-cap medical companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, earnings, valuation, dividends, profitability, risk and analyst recommendations.

Analyst Recommendations

This is a summary of current recommendations for Eli Lilly and Company and AbbVie, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eli Lilly and Company	1	3	16	0	2.75
AbbVie	0	8	16	3	2.81

Eli Lilly and Company currently has a consensus price target of $1,012.56, suggesting a potential upside of 28.35%. AbbVie has a consensus price target of $211.29, suggesting a potential upside of 10.89%. Given Eli Lilly and Company’s higher probable upside, analysts plainly believe Eli Lilly and Company is more favorable than AbbVie.

Volatility & Risk

Eli Lilly and Company has a beta of 0.4, suggesting that its share price is 60% less volatile than the S&P 500. Comparatively, AbbVie has a beta of 0.48, suggesting that its share price is 52% less volatile than the S&P 500.

Profitability

This table compares Eli Lilly and Company and AbbVie’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eli Lilly and Company	22.67%	85.51%	15.74%
AbbVie	7.31%	412.03%	13.11%

Earnings and Valuation

This table compares Eli Lilly and Company and AbbVie”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eli Lilly and Company	$45.04 billion	16.60	$10.59 billion	$12.29	64.19
AbbVie	$56.33 billion	5.97	$4.28 billion	$2.35	81.08

Eli Lilly and Company has higher earnings, but lower revenue than AbbVie. Eli Lilly and Company is trading at a lower price-to-earnings ratio than AbbVie, indicating that it is currently the more affordable of the two stocks.

Dividends

Eli Lilly and Company pays an annual dividend of $6.00 per share and has a dividend yield of 0.8%. AbbVie pays an annual dividend of $6.56 per share and has a dividend yield of 3.4%. Eli Lilly and Company pays out 48.8% of its earnings in the form of a dividend. AbbVie pays out 279.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eli Lilly and Company has increased its dividend for 11 consecutive years and AbbVie has increased its dividend for 53 consecutive years. AbbVie is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

82.5% of Eli Lilly and Company shares are owned by institutional investors. Comparatively, 70.2% of AbbVie shares are owned by institutional investors. 0.1% of Eli Lilly and Company shares are owned by company insiders. Comparatively, 0.3% of AbbVie shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

AbbVie beats Eli Lilly and Company on 9 of the 17 factors compared between the two stocks.

About Eli Lilly and Company

Eli Lilly and Company discovers, develops, and markets human pharmaceuticals worldwide. The company offers Basaglar, Humalog, Humalog Mix 75/25, Humalog U-100, Humalog U-200, Humalog Mix 50/50, insulin lispro, insulin lispro protamine, insulin lispro mix 75/25, Humulin, Humulin 70/30, Humulin N, Humulin R, and Humulin U-500 for diabetes; Jardiance, Mounjaro, and Trulicity for type 2 diabetes; and Zepbound for obesity. It also provides oncology products, including Alimta, Cyramza, Erbitux, Jaypirca, Retevmo, Tyvyt, and Verzenio. In addition, the company offers Olumiant for rheumatoid arthritis, atopic dermatitis, severe alopecia areata, and COVID-19; Taltz for plaque psoriasis, psoriatic arthritis, ankylosing spondylitis, and non-radiographic axial spondylarthritis; Omvoh for ulcerative colitis; Cymbalta for depressive disorder, diabetic peripheral neuropathic pain, generalized anxiety disorder, fibromyalgia, and chronic musculoskeletal pain; Ebglyss for severe atopic dermatitis; and Emgality for migraine prevention and episodic cluster headache. Further, it provides Cialis for erectile dysfunction and benign prostatic hyperplasia; and Forteo for osteoporosis. It has collaborations with Incyte Corporation; Boehringer Ingelheim Pharmaceuticals, Inc.; F. Hoffmann-La Roche Ltd and Genentech, Inc.; Biologics, Inc., AbCellera Biologics Inc.; and Chugai Pharmaceutical Co., Ltd. The company was founded in 1876 and is headquartered in Indianapolis, Indiana.

About AbbVie

AbbVie Inc. discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company offers Humira, an injection for autoimmune and intestinal Behçet's diseases, and pyoderma gangrenosum; Skyrizi to treat moderate to severe plaque psoriasis, psoriatic disease, and Crohn's disease; Rinvoq to treat rheumatoid and psoriatic arthritis, ankylosing spondylitis, atopic dermatitis, axial spondyloarthropathy, ulcerative colitis, and Crohn's disease; Imbruvica for the treatment of adult patients with blood cancers; Epkinly to treat lymphoma; Elahere to treat cancer; and Venclexta/Venclyxto to treat blood cancers. It also provides facial injectables, plastics and regenerative medicine, body contouring, and skincare products; botox therapeutic; Vraylar for depressive disorder; Duopa and Duodopa to treat advanced Parkinson's disease; Ubrelvy for the acute treatment of migraine in adults; and Qulipta for episodic and chronic migraine. In addition, the company offers Ozurdex for eye diseases; Lumigan/Ganfort and Alphagan/Combigan for the reduction of elevated intraocular pressure in patients with open angle glaucoma or ocular hypertension; Restasis to increase tear production; and other eye care products. Further, it provides Mavyret/Maviret to treat chronic hepatitis C virus genotype 1-6 infection; Creon, a pancreatic enzyme therapy; Lupron to treat advanced prostate cancer, endometriosis and central precocious puberty, and patients with anemia caused by uterine fibroids; Linzess/Constella to treat irritable bowel syndrome with constipation and chronic idiopathic constipation; and Synthroid for hypothyroidism. It has collaborations with Calico Life Sciences LLC; REGENXBIO Inc.; Janssen Biotech, Inc.; and Genentech, Inc., as well as collaboration with Tentarix Biotherapeutics, LP to develop conditionally-active and multi-specific biologics for oncology and immunology. The company was incorporated in 2012 and is headquartered in North Chicago, Illinois.