Eli Lilly

Eli Lilly Shares Gain Over 4% After Profit Beat; Target Price $225

Indianapolis-based pharmaceutical giant Eli Lilly and Company reported better-than-expected profit in the fourth quarter, led by solid demand for its cancer and diabetes drugs, sending its shares up over 4% in pre-market trading on Friday.

The leading pharmaceuticals company said its net earnings rose to $2.12 billion, or $2.32 per share, from $1.50 billion, or $1.64 per share, seen in the same period a year earlier. That was year-over-year growth of over 41% from the same quarter a year ago. Excluding items, Eli Lilly earned $2.75 per share, higher than the market expectations of $2.35 per share.

In the fourth quarter of 2020, worldwide revenue was $7.440 billion, an increase of 22% compared with the fourth quarter of 2019, driven by a 24% increase in volume and a 1% increase due to the favourable impact of foreign exchange rates, partially offset by a 4% decrease due to lower realized prices.

Eli Lilly shares rose over 4% to $219 in pre-market trading on Friday; the stock surged above 28% in 2020.

Eli Lilly Stock Price Forecast

Eleven analysts who offered stock ratings for Eli Lilly in the last three months forecast the average price in 12 months at $194.90 with a high forecast of $225.00 and a low forecast of $150.00.

The average price target represents a -7.24% decrease from the last price of $210.12. From those 11 analysts, eight rated “Buy”, three rated “Hold”, and none rate “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $190 with a high of $231 under a bull scenario and $143 under the worst-case scenario. The firm currently has an “Overweight” rating on the pharmaceutical company’s stock.

Several other analysts have also recently commented on the stock. Berenberg raised the target price to $190 from $150. BofA Global Research upped the price objective to $225 from $195. Guggenheim increased the price objective to $210 from $186. Citigroup raised the stock price forecast to $210 from $146. Mizuho upped to buy from neutral and raised the target price to $222 from $164.

Analyst Comments

“We are Overweight Eli Lilly (LLY) shares as we believe consensus underappreciates Lilly’s long-term revenue and EPS growth prospectsl. We project 2020e-2025e CAGR revenue +8% and EPS +12%. We see upside potential for pipeline candidate tirzepatide’s “trifecta” opportunity in diabetes, obesity, and cardiovascular health,” said David Risinger, equity analyst at Morgan Stanley.

“Pipeline newsflow on diabetes and Alzheimer’s candidates could drive stock upside/downside, but we view LLY’s Alzheimer’s pipeline as an inexpensive call option. Lilly could pursue additional tuck-in transactions to enhance long-term growth prospects.”

Upside and Downside Risks

Risks to Upside: Upside risks are financial results above expectations, positive pipeline news (e.g. tirzepatide for diabetes and Alzheimer’s-related newsflow), competing products disappoint, and compelling external action – highlighted by Morgan Stanley.

Risks to Downside: Financials miss, pipeline disappoints (e.g. tirzepatide), negative Alzheimer’s newsflow, competing drugs surprise on the upside, and drug pricing concerns increase.

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