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Eli Lilly's 2016 Guidance Released Next Week Could Disappoint, Leerink Warns

  • Eli Lilly and Co (NYSE: LLY) shares have appreciated 24.44 percent year-to-date, from trading close to the 52-week low on December 31, 2014, at $68.99.
  • Leerink’s Seamus Fernandez has maintained an Outperform rating on the company, while raising the price target from $93 to $95.
  • Fernandez expects the company’s 2016 EPS guidance, scheduled to be announced on January 5, to be disappointing, given that the consensus forecasts do not seem to have factored in the absence of the 2015 FX benefit.

Analyst Seamus Fernandez mentioned, however, that there was a “wide range of attractive upside scenarios for investors with an obvious focus on LLY's Alzheimer's pipeline, but pipeline upside opportunities more broadly include agents in oncology and neurology/CNS.”

There is also likely to be opportunity for significant operating leverage post-2016, with the diabetes franchise accelerating and the oncology franchise broadening.

In addition, the outcome of the EXPEDITION 3 study on solanezumab in mild Alzheimer's would become available by the end of 2016, which is expected to offer 10-20 percent upside to the stock.

Key revenue drivers for Eli Lilly during 2017-2026 are expected to be its products, solanezumab for Alzheimer's disease, abemaciclib for solid tumor, Trulicity for diabetes and baricitinib in RA.

Risk-adjusted sales for these four assets are estimated at $7 billion worldwide by 2026, “with significant upside potential from solanezumab and/or abemaciclib.”

Latest Ratings for LLY

Mar 2021Truist SecuritiesMaintainsBuy
Feb 2021Cowen & Co.MaintainsOutperform
Feb 2021Morgan StanleyMaintainsOverweight

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