UPDATE: Barclays Upgrades Eli Lilly Despite Sector Downgrade

In a note released Wednesday morning, Barclays analyst Mark Purcell upgraded shares of Eli Lilly LLY from Underweight to Equal-weight and raised the price target from $51 to $63, despite downgrading his U.S. Pharma sector view from Positive to Neutral.

Purcell wrote, "The sector has re-rated back to historical averages, modest growth prospects appear priced in and pipeline expectations remain relatively high despite the increasingly crowded commercial environment."

He added that the firm's global strategists believe Pharma will underperform compared to cyclical sectors.

In terms of Eli Lilly, Purcell says after troubles in 2014, the company is positioned to return to growth, driven by diabetes assets dulaglutide and basal insulin PEG-lispro. However, he noted that margin targets for oncology and immunology are already fully reflected in the consensus.