By Sam Boughedda
Jefferies analysts initiated Eli Lilly & Co. (NYSE:LLY) with a Hold rating and $290 price target and Merck & Company Inc (NYSE:MRK) with a Buy rating and $125 price target in separate notes to clients on Monday.
The analysts told investors that LLY at $300 per share is "priced to perfection."
They explained that the stock has "outperformed the DRG" (ARCA Pharmaceutical index) but "at current levels looks 'priced to perfection' as shares bake in success above sell-side #'s."
"While we're bullish on Mounjaro ($40B peak sales) esp T2DM where RR could be unprecedented, for LLY to hit $400/$500, GLP-1 peak sales would need to be $65B & $90B, respectively. We're also cautious on Alzh franchise ($4.3B vs $8.2B) + LTmargins (45% vs 50%) + IRA impact, which needs clarity on before we can see upside," the analysts explained.
They revealed that Merck is the firm's top pharma pick. In addition, they added that the company's $30 billion Keytruda problem is two-thirds solved.
This is due to: "1) Keytruda's LOE looks mismodeled by the street given subQ opportunity, coform., and potential IP upside 2) Sotatercept numbers have upside ($7.5B vs$3.3B) given treatment duration + expansion into other forms of PAH + HF 3)we see MRK hitting its $11B+ target for Gardasil."