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 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.
Related Links:
BMO's Bearish Stance On Eli Lilly Comes To An End
Eli Lilly CEO Calls For Uniform Prices, Better Use Of Technology In Health Care
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