Berenberg bullish on Eli Lilly, sees nearly 25% upside

Investing.com -- Berenberg analyst Kerry Holford upgraded Eli Lilly to buy, raising its price target to $1,400 in a note Tuesday, representing almost 25% upside, as it backs the drugmaker to extend its lead in the fast-growing obesity market.

Holford told investors that the firm's latest return-on-R&D-investment analysis confirms Lilly's track record of delivering best-in-class returns, and that she sees upside to its 2026 guidance.

While investor expectations for Lilly to stay ahead in obesity are high, Holford said she is confident and that the pipeline being funded by that success is underappreciated.

"The external pipeline investment that obesity success is fuelling remains underestimated, in our view," she wrote, noting Lilly has committed about $60 billion across more than 25 deals this year.

Holford said Zepbound and Mounjaro are established leaders in obesity and diabetes, and expects the imminent diabetes approval of oral GLP-1 drug Foundayo to unlock significant demand, aided by the Medicare Bridge program.

The analyst also pointed to recent acquisitions that diversify the pipeline, including the roughly $4 billion purchase of AtaiBeckley, which adds psychedelic assets targeting mental health, and the $8 billion acquisition of Centessa, which takes Lilly into sleep-wake disorders such as narcolepsy.

Holford believes Lilly's premium valuation is justified. The stock trades at 23.4 times 2027 earnings, versus a global peer average of 13.6 times, but she argued its superior growth, pipeline breadth and research productivity "warrant a more significant premium."

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