JPMorgan Resumes Coverage Of Eli Lilly: 'One Of The Best-Positioned Names In Our Group'

Shares of big-cap pharma names have been on a solid uptrend since the second-quarter earnings season in late July.

Against this backdrop, Eli Lilly And Co (NYSE: LLY)'s prospects prompted a JPMorgan analyst to turn bullish on stock Wednesday. 

The Analyst

Analyst Christ Schott resumed coverage on Eli Lilly with an Overweight and year-end 2019 price target of $117.

The Thesis

Eli Lilly is "fundamentally one of the best-positioned names in our group," Schott said in a Wednesday note. (See his track record here.) 

The bull thesis is predicated on the healthy growth of core products including Trulicity, Taltz and Jardiance and the next wave of late-stage pipeline assets such as CGRP, tanezumab and GIP/GLP-1, the analyst said. 

JPMorgan projects that Eli Lilly will generate above-average topline growth of about 5-percent CAGR; significant margin expansion from 27 percent in 2018 to mid-30-percent by 2024; and health EPS growth of about 10 percent CAGR.

Schott named the following as near-term catalysts for the stock:

• The readout from the Trulicity REWIND CV study due early in the early fourth quarter. 
• Clinical data from GIP/GLP-1 program.
• Phase 3 data from tanezumab due in late 2018 or early 2019.

The above catalysts could support upside to Street estimates, the analyst said.

Despite Lilly's strong run year-to-date, JPMorgan continues to see an attractive setup the stock. 

The Price Action

Eli Lilly shares have gained about 28 percent year-to-date.

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