Market Overview

Deutsche Bank: Eli Lilly At 'Critical Stage' In Its Journey

Related LLY
Johnson & Johnson Downgraded On Hefty Valuation Compared To Peers
Wall Street's M&A Chatter From September 18: Walgreens-Rite Aid, Northrup Grumman-Orbital ATK, Itron-Silver Spring Networks
Oramed Now Has a Clear Path to Market With Oral Insulin (GuruFocus)

Gregg Gilbert of Deutsche Bank initiated coverage of Eli Lilly (NYSE: LLY) on Wednesday with a Buy rating and $70 price target.

“Lilly is at a critical stage in its journey, dealing with loss of exclusivity for large products with a keen eye on costs, while investing to deliver new products to the market,” Gilbert wrote in a note to clients on Wednesday. “With a strong diabetes portfolio, under-the-radar oncology franchise opportunity, and recently-bolstered animal health segment, we believe Lilly is poised for return to growth in years ahead.”

Lilly remains a leader in the diabetes market, despite the market becoming increasingly competitive over recent years. The company's diabetes franchise generated $4.2 billion in sales in 2013, representing 18 percent of the company's total revenue. Gilbert is projecting Lilly will increase its diabetes related sales to $7.2 billion in 2018 which will represent 29 percent of total revenue.

According to the analyst, new launches from Jardiance will see peak sales of $500 million in sales by 2018, SGLT2/DPP4 and dulaglutide will see peak sales of $500 million and $850 million, respectively in 2019. Finally, basal insulin peglispro will see peak sales of $600 million by 2020.

Lilly also has compelling oncology assets, according to Gilbert. The analyst sees a “solid opportunity” in Cyramza, which only recently saw regulatory approval for patients suffering from gastric cancer. The analyst estimates Cyramza will see peak sales of roughly $2 billion by 2020.

Lilly plans to seek approval for a second line combination therapy for gastric cancer in addition to other novel product candidates in clinical development, including necitumumab in Phase 3 and abemaciclib which is expected to begin a Phase 3 trial soon.

Beyond diabetes and oncology, Lilly has a late state pipeline that includes other therapeutic categories, including auto-immune, cardiovascular, musculoskeletal and neuro-degenerative diseases.

Finally, Lilly's animal health division provides the company with a form of stability through durable cash flows and a highly leveragable business model with margin expansion opportunities.

Latest Ratings for LLY

Sep 2017JefferiesMaintainsBuy
Sep 2017BMO CapitalMaintainsUnderperform
Jul 2017Leerink SwannDowngradesOutperformMarket Perform

View More Analyst Ratings for LLY
View the Latest Analyst Ratings

Posted-In: Diabetes Gregg Gilbertm Eli LillyAnalyst Color News Price Target Initiation Analyst Ratings


Related Articles (LLY)

View Comments and Join the Discussion!