BMO Capital Downgrades Eli Lilly (LLY) to Market Perform Following Sola's Failure
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BMO Capital downgraded Eli Lilly (NYSE: LLY) from Outperform to Market Perform with a price target of $64.00 (from $91).
Analyst Alex Arfaei commented, "We believe Sola’s failure in EXPEDITION-3 is clearly a meaningfully negative event as it significantly lowers Lilly’s long-term growth prospects. We’ve lowered our Alzheimer’s pipeline forecast from $6Bn by 2024 to ~$2Bn to reflect lower risk adjusted expectations. We now forecast that Lilly can grow revenues by a CAGR of 3% from 2016 to 2020, below guidance of ~5% because of more cautious views for the diabetes franchise. We forecast ~12% EPS growth through 2020, and now value the stock at ~$64/share. Hence, we are downgrading LLY to Market Perform. This note contains our updated model and scenarios excluding Sola."
Shares of Eli Lilly closed at $75.99 yesterday.
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