Analyst Sees Eli Lilly Fairly Valued At $81 Per Share, Downgrades To Hold

Argus analyst Katelyn Bayone believes shares of Eli Lilly and Co (NYSE: LLY) are fairly valued at around $81, which prompted her to downgrade the stock from Buy to Hold.

According to Bayone, shares are trading near their 52-week high and also at a superior valuation versus its peers. In fact, the analyst doesn't think the stock deserves a premium valuation after the company lost patent protection on several key drugs through 2023 which represent around 40 percent of revenue. The company has also suffered a recent late-stage setback for baricitinib and solanezumab.

As such, Eli Lilly boasts fewer growth drivers in the near-term and will now become more reliant on its diabetes drugs Jardiance and Trulicity, both of which also face heightened competition.

Longer-Term Buy Rating

The analyst did note a Buy rating could be reinstated in the future if the company is able to show positive regulatory developments or better-than-expected sales from a new drug launch.

Bayone reiterated her 2017 earnings per share estimate of $4.13 and revenue of $22.0 billion. The analyst also reiterated her 2018's estimate of $4.35 per share but revised the company's revenue estimate lower from $22.7 billion to $22.2 billion.

Nevertheless, the analyst rated the stock as a long-term Buy rating given its longer-term pipeline opportunities and perhaps more important, a track record of launching successful new products but the stock's current valuation can't be ignored and was a major factor in the downgrade.

See Also:

Mark Your Calendar For These Days In May To Play The Volatility Around FDA Decision Dates

What Would A $5.8 Billion NIH Cut Look Like? Devastation