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Argus analyst Katelyn Bayone believes shares of Eli Lilly and Co (NYSE:LLY) are fairly valued at around $81, which prompted her to downgrade the stock from Buy to Hold.
According to Bayone, shares are trading near their 52-week high and also at a superior valuation versus its peers. In fact, the analyst doesn't think the stock deserves a premium valuation after the company lost patent protection on several key drugs through 2023 which represent around 40 percent of revenue. The company has also suffered a recent late-stage setback for baricitinib and solanezumab.
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As such, Eli Lilly boasts fewer growth drivers in the near-term and will now become more reliant on its diabetes drugs Jardiance and Trulicity, both of which also face heightened competition.
Longer-Term Buy Rating
The analyst did note a Buy rating could be reinstated in the future if the company is able to show positive regulatory developments or better-than-expected sales from a new drug launch.
Bayone reiterated her 2017 earnings per share estimate of $4.13 and revenue of $22.0 billion. The analyst also reiterated her 2018's estimate of $4.35 per share but revised the company's revenue estimate lower from $22.7 billion to $22.2 billion.
Nevertheless, the analyst rated the stock as a long-term Buy rating given its longer-term pipeline opportunities and perhaps more important, a track record of launching successful new products but the stock's current valuation can't be ignored and was a major factor in the downgrade.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.