Eli Lilly & Company: Updated Model to Reflect IPR&D Charge for 3Q26

LLY announced it will take a $4.2bn pretax IPR&D charge in 3Q that will lead to an EPS impact of -$4.57. We update our model to reflect this change and now est 3Q EPS of $5.30 (vs $9.87 prior). J.P. Morgan maintains an Overweight rating on Eli Lilly & Company (LLY, LLY US) with a Dec-27 price target of $1,500.00 (price of $1,169.60 as of 08 Oct 26). We lower our 2026E adj. EPS to $32.31 from $36.88 (down 12.4%). Quarterly adj. EPS estimates for FY2026 are 8.55A, 8.38A, 5.30E and 10.07E for Q1-Q4, respectively. Our revenue estimates are $19,799m (1Q26A), $22,974m (2Q26A), $22,159m (3Q26E) and $23,541m (4Q26E), with full-year 2026E revenue of $88,473m and 2027E of $104,514m. Adj. EPS estimates are $32.31, $50.09 and $58.23 for FY26E, FY27E and FY28E. We view the charge as a one-time accounting impact that does not change our fundamental view.