Close

UPDATE: UBS Upgrades Eli Lilly (LLY) to Buy, New Top Pick

September 22, 2022 5:49 AM EDT
Get Alerts LLY Hot Sheet
Price: $311.46 +0.19%

Rating Summary:
    21 Buy, 10 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 6 | Down: 13 | New: 58
Join SI Premium – FREE
(Updated - September 22, 2022 5:50 AM EDT)

UBS analyst Navin Jacob upgraded Eli Lilly (NYSE: LLY) from Neutral to Buy with a price target of $363.00 (from $335.00).

The analyst comments "We are upgrading LLY to a Buy with a $363 PT. We have been on the sidelines with LLY, primarily due to our concern around the risk-reward into the SURMOUNT-1 data and approval in T2DM (see note). With these events in the rear-view mirror, we now view LLY as being the most attractive name in our large cap coverage, with the greatest potential upside to numbers. The key components of our buy thesis are, 1) Mounjaro (tirzepatide) - the SURMOUNT-1 readout was a best-in-class dataset with >20% weight loss and several underappreciated metrics (e.g. >95% of pre-diabetics normalized blood sugars) which should ultimately drive sales to our $25bn peak est, 2) donanemab - while risky and not critical for the buy thesis, donanemab is the highest potential late-stage Alzheimer's asset, in our view, with LLY also being the best risk-reward play into BIIB's upcoming lecanemab readout (see our mini-dive + derivative notes), and 3) valuation - seems "expensive" now (~32x '23 cons EPS), but with double digit top and bottom line 5yr growth CAGRs from a diversified business (and less patent cliffs vs peers) and >$20 in EPS by 2026E, we believe LLY currently deserves a significant premium. In the near-term, downside risk could come from not being able to file tirzepatide in obesity (based on SURMOUNT-1), though fundamentally the filing/approval is a "when", not an "if", in our view. LLY is our new top large cap pick."

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 $296.48 yesterday.


You May Also Be Interested In





Related Categories

Analyst Comments, Analyst PT Change, Hot Comments, Hot Upgrades, Upgrades

Related Entities

UBS