UPDATE: Eli Lilly (LLY) PT Raised to $364 at Morgan Stanley, Asssumes Overweight

Morgan Stanley analyst Terence C Flynn raised the price target on Eli Lilly (NYSE: LLY) to $364.00 (from $265.00) while maintaining a Overweight rating.

The analyst comments "LLY has the most robust new product cycle (and hence growth) outlook in Pharma as over the next 2 years the company could launch five new drugs, two of which (Tirzepatide for diabesity and Donanemab for Alzheimer's) we project could achieve 2030 sales in excess of $5bn. These new launches will boost LLY’s top line by 40% (2025 vs. 2022), expand operating margins to 41% from 32% (2025 vs. 2022), and put LLY on pace to deliver 2025/2030 EPS of ~$16/$21 (vs. 2022 of $8.76) vs. consensus 2025 EPS of ~$15. We expect FDA approval of Tirzepatide for diabetes in June and our AlphaWise physician survey projects further uptake of GLP-1's in diabetes, driving growth of this ~$15bn market and that the Tirzepatide launch will expand LLY's GLP-1 market share by 10% points. Our analysis of weight loss/outcomes data and payer work suggests Tirzepatide will also be successful clinically (Phase 3 data mid-year) and commercially for obesity, which could open up a new $20bn market opportunity. We model 2023/2025/2030 Tirzepatide WW sales of $1.4bn/$4.8bn/$15.5bn (above consensus of $704mn/$3bn/$10bn), but this only includes $3bn in 2030 for obesity (which could go to $7.6bn in our Bull case). Donanemab is a high risk/high reward pipeline program (we assume a 50% probability of success or POS and 2030 sales of $3bn vs. consensus of ~$2bn), but we believe the setup into competitor Phase 3 Alzheimer’s data (later this year) is favorable. If LLY secures FDA approval of Tirzepatide in diabetes, delivers positive Phase 3 obesity data and competitor Phase 3 Alzheimer's data is positive, we would expect LLY's P/E multiple to further expand."

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