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Eli Lilly's Risks Could Be Underappreciated, Goldman Sachs Says In Downgrade

Eli Lilly's Risks Could Be Underappreciated, Goldman Sachs Says In Downgrade

The case for buying shares of Eli Lilly and Co (NYSE: LLY) no longer applies, as an analysis of the company's franchise suggests investors are underappreciating the risk surrounding its biggest diabetes franchise, according to Goldman Sachs. 

The Analyst

Goldman Sachs' Jami Rubin downgraded Eli Lilly rating from Buy to Neutral with a price target lowered from $98 to $95.

The Thesis

Despite the downgrade, Eli Lilly still offers investors an attractive long-term story with a diversified portfolio that could offer margin expansion over time, Rubin said in a Tuesday note. (See the analyst's track record here.) 

But here are some risks to the company's diabetes franchise, particularly Trulicity, which happens to be the company's "biggest and fastest" growth driver, she said. 

Trulicity's risk profile has grown recently due to the following factors, Rubin said: 

  • Greater share gains from Novo Nordisk A/S (ADR) (NYSE: NVO)'s competing therapy Victoza after its CV label in June 2017. 
  • Heightened competition from injectable semaglutide. 
  • Potential negative impact from Novo Nordisk's oral semaglutide product, especially if data that's expected to arrive in 2018 is successful. 

The three headline risks are reason enough for investors to move to the sidelines, especially ahead of baricitinib's data release this year and ongoing questions surrounding the drug's safety, according to Goldman Sachs. 

Price Action

Shares of Eli Lilly were trading lower by 1.51 percent at the time of publication. 

Related Links:

7 Catalysts For Eli Lilly Over The Next Year

Argus Shares Eli Lilly's Optimism, Upgrades To Buy

Latest Ratings for LLY

Oct 2019MaintainsBuy
Oct 2019ReinstatesBuy
Sep 2019ReiteratesNeutral

View More Analyst Ratings for LLY
View the Latest Analyst Ratings

Posted-In: baricitinib Diabetes Goldman Sachs Jami RubinAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


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VIACJP MorganReinstates50.0
NUVASVB LeerinkMaintains92.0
SRPTCantor FitzgeraldMaintains211.0
LULUGoldman SachsMaintains219.0
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