On Wednesday, Truist Securities reaffirmed their Buy rating on Eli Lilly (NYSE:LLY) shares with a steady price target of $1,029. The pharmaceutical giant, currently valued at $703.53 billion, trades at a P/E ratio of 83.8, reflecting high growth expectations.
According to InvestingPro analysis, the stock appears overvalued compared to its Fair Value, though analyst targets range from $580 to $1,250. The focus for Eli Lilly, as per Truist Securities, is primarily on the company's GLP-1/obesity drugs, Mounjaro and Zepbound, and their performance in the cardiometabolic sector. The firm is closely monitoring whether these drugs will surpass fourth-quarter consensus expectations.
With impressive revenue growth of 27.41% in the last twelve months and a robust gross profit margin of 80.91%, Eli Lilly demonstrates strong commercial execution. InvestingPro subscribers can access 15+ additional insights about Eli Lilly's financial health, which is rated as GOOD by their comprehensive scoring system.
Truist Securities expressed confidence that as the market becomes more assured about Eli Lilly's production and supply capabilities leading into 2025, there could be increased momentum for Mounjaro and Zepbound throughout the year. The firm anticipates further developments in the obesity and cardiometabolic pipeline, with upcoming data expected from various Phase 2 trials in 2025. These include Bima for obesity, retatrutide for chronic kidney disease (CKD) with or without type 2 diabetes (T2D), eloralintide for obesity, and Mazdutide, also targeting obesity.
Beyond the cardiometabolic area, Truist Securities highlighted potential progress in immunology and inflammation (I&I), with Phase 2 data expected from a KV1.3 potassium channel blocker for psoriasis and an oral IL-17 DC-853 treatment stemming from the acquisition of Dice Therapeutics.
In their financial model update, Truist Securities has now detailed forecasts for fiscal year 2025 by quarter and extended their model to 2034. The firm's revenue and EPS projections for 2024, 2025, and 2026 are $45.6 billion, $55.4 billion, and $64.1 billion, respectively, with EPS estimates at $13.19, $22.64, and $29.03.
These figures are slightly adjusted from their previous estimates, with the 2026 EPS forecast showing a marginal increase from $28.14 to $29.03. Despite these changes, the firm's Buy rating and price target for Eli Lilly remain unchanged.
In other recent news, the global pharmaceutical industry faces uncertainties due to U.S. tariffs and geopolitical tensions, says TD Cowen. Large-cap pharmaceutical companies are seen as well-equipped to mitigate these risks. TD Cowen's analysis reveals that, on average, these companies derive 6% of their revenue from China, with Organon & Co., AstraZeneca PLC (LON:AZN), and Novo Nordisk (NYSE:NVO) A/S having the most significant revenue exposure to these regions.
Meanwhile, Citi maintains a Buy rating on Eli Lilly shares following the announcement of the phase 3 REDEFINE-1 study results from Novo, a competitor in the obesity treatment market. The study's findings showed a 22.7% weight loss efficacy at 68 weeks, falling short of the anticipated 25% target. This development is seen as favorable for Eli Lilly, whose tirzepatide demonstrated a 20.9% weight loss.
Viking Therapeutics (NASDAQ:VKTX)' stock soared 12% following the announcement of Novo Nordisk's disappointing obesity drug trial results. The trial's outcome has led to a reassessment of the competitive landscape in the obesity drug market, with Viking Therapeutics potentially standing to benefit.
On a related note, shares of Novo Nordisk A/S experienced a significant drop following the release of less than anticipated results from a study of its experimental obesity drug, CagriSema. In contrast, shares of Eli Lilly & Co. saw a 10% increase following the update.
Lastly, Bernstein SocGen Group maintains its Outperform rating for Eli Lilly following the FDA's confirmation that the company's drug, Tirzepatide, is no longer in shortage.
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