A Pair Trade With Eli Lilly And Johnson & Johnson? Goldman Just Explained Why It's A Solid Idea

In a recent report, Goldman Sachs analysts provided an idea for a pair trade with Eli Lilly and Co (NYSE: LLY) and Johnson & Johnson (NYSE: JNJ).

The firm expects to see Eli Lilly deliver better results in 2015 than Johnson & Johnson.

Eli Lilly

Goldman upgraded Eli Lilly’s stock from Sell to Neutral, which it said was “based on the increased optionality provided by cost reduction, new product launches and pipeline assets."

Since reducing its FY 2014 outlook and guiding that FY 2015 will be near expectations, other firms have weighed in on the stock as well. The most bullish was Jefferies; analyst Jeffrey Holford upgraded the stock to Buy on the back of “margin expansion and anticipation of significant pipeline optionality.”

Deutsche Bank also maintains a positive outlook for Eli Lilly.

Related Topic: Eil Lilly CEO Talks New Product Launches, Pricing Pressure From Other Companies

Johnson & Johnson

On the flip side, Johnson & Johnson was downgraded by Goldman from Neutral to Sell. The research firm set a price target of $97, about 5 percent below current levels.

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