Deutsche Bank Starts Eli Lilly (LLY) at Buy

Deutsche Bank initiates coverage on Eli Lilly (NYSE: LLY) with a Buy rating and a price target of $71.00. Analyst Gregg Gilbert expects a return to growth as patent cliffs fade.

"LLY is at a critical stage in its journey, dealing with loss of exclusivity for large products with a keen eye on costs, while investing to deliver new products to the market. With a strong diabetes portfolio, under-the-radar oncology franchise opportunity, and recently-bolstered animal health segment, we believe Lilly is poised for return to growth in years ahead. We are also hopeful that LLY will be in a position relatively soon to grow its dividend after a hiatus," said Gilbert.

"With recent approvals of Jardiance (8/1/14) and Basaglar (8/18/14), and upcoming regulatory action on SGLT2/DPP4 combination and Trulicity (dulaglutide), LLY continues its leadership in the diabetes segment. We expect the combined diabetes launches to generate ~$2.5bn in peak sales by 2020. In oncology, we expect Cyramza sales to gain momentum in 2015 and model peak sales of ~$2bn in 2020," he added.

Regarding its pipeline, he said, "LLY has ~8 Phase 3 compounds in a variety of indications. Abemaciclib, (CDK4/6) expected to be in Phase 3 soon, and solanezumab, (Phase 3) for Alzheimers, have blockbuster potential, we believe. Other interesting pipeline shots on goal are evacetrapib (CETP), and necitumumab (biologic, fully human IgG1 monoclonal antibody for first line treatment of stage IV non-small cell lung cancer.)"

For an analyst ratings summary and ratings history on Eli Lilly click here. For more ratings news on Eli Lilly click here.

Shares of Eli Lilly closed at $62.81 yesterday.

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