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A UBS analyst raised Eli Lilly’s (NYSE:LLY) rating to Buy from Neutral, with its price target raised to $363 per share from $335.
The analyst explained, in a research note, they have been on the sidelines with LLY, primarily due to concerns around the risk-reward into the SURMOUNT-1 data and approval in T2DM.
However, with these events in the rear-view mirror, they now view LLY as being the most attractive name in their large-cap coverage, with the “greatest potential upside to numbers.”
The analyst added that the key components of their buy thesis are, Mounjaro, donanemab, and the company’s valuation.
“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,” said the analyst. “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.”
He added that the valuation “seems expensive now,” but with “double-digit top and bottom line 5yr growth CAGRs from a diversified business and >$20 in EPS by 2026E, we believe LLY currently deserves a significant premium.”
Eli Lilly shares are up over 3% Thursday.
