UBS upgrades Eli Lilly declaring LLY is working on ‘the biggest drug ever’

UBS upgrades Eli Lilly declaring LLY is working on ‘the biggest drug ever’
1 week ago
3 mins read

UBS Group (SWX: UBSG), a global financial provider, upgraded Eli Lilly (NYSE: LLY) to buy from neutral on Tuesday, September 20. UBS analyst Navin Jacob updated the price target from the previous $335 to the current, more bullish price of $363.

The upgrade comes as Lilly starts submitting a marketing application for its medication “Donanemab”, a late-stage Alzheimer’s drug. The analyst called this drug “the biggest drug ever,” and the “highest potential late-stage Alzheimer’s asset”. 

“The key components of our buy thesis are, 1) 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.”

Jacob also added:

“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.”

LLY chart and analysis 

Over the past month, LLY shares traded from $296.32 to $324.59, staying below moving averages. The long-term trend is neutral, but the short-term trend remains negative, despite the positive upgrades. 

Technical analysis shows a support line at $296.47 and a resistance zone ranging from $308.62 to $315.07. 

LLY 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

TipRanks analysts rate the shares a ‘strong buy,’ with the average price in the next 12 months reaching $368.63, 21.27% higher than the current trading price of $303.98. Notably, out of 9 market experts covering the stock, all gave LLY a buy rating. 

Wall Street analysts’ price targets for LLY. Source: TipRanks  

Currently, Eli Lilly shares are trading at roughly 32 times 2023 earnings consensus, giving them an appearance of a “pricey” stock; yet, UBS analysts’ decided to upgrade LLY, indicating that it deserves a high premium. 

Shareholders of the firm can be happy with the news as LLY is up 12.91% year-to-date (YTD), remaining a solid performer. Notably, back in June, Finbold said that Eli Lilly could be a recession-proof stock. On the other hand, investors looking to get in could sit on the sidelines to assess better entry positions if the markets take a turn for the worse. 

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

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Dino Kurbegovic

Dino is an investor and technology enthusiast with years of experience in managing complex projects. At Finbold he covers stories on stocks, investing, micro and macroeconomic trends. Also, he’s also building a micro solar power plants in his hometown.