Citi Reinstates Coverage of Eli Lilly with Optimistic Outlook
Citi has renewed its analysis of Eli Lilly & Co., assigning a Buy rating with a target price of $1,060 per share. This decision marks the resumption of coverage after a temporary suspension, driven by improved forecasts for tirzepatide, Eli Lilly's promising treatment for diabetes and obesity.
Why Tirzepatide's Forecasts Are Rising
The upgraded projections for tirzepatide are rooted in recent sales figures, evolving prescription patterns, and updated company guidance. Based on these factors, Citi anticipates an increase in Eli Lilly's non-GAAP EPS forecasts by up to 19% for 2024-27 and 9-15% thereafter. This forecast suggests a strong belief in the drug's market potential, which is supported by positive sales data.
Understanding EPS and Its Impact
Non-GAAP EPS stands for Earnings Per Share excluding certain items, providing a clearer view of a company's core profitability. For instance, if Eli Lilly earns $10 million and has 10 million shares, the EPS is $1.00. A higher EPS indicates better profitability, making the company more attractive to investors.
Competitive Landscape and Market Position
Citi's analysis also notes a shift in the competitive landscape for diabetes and obesity treatments. The firm highlights a reduced threat from Roche’s oral GLP-1 CT-996 due to concerns like increased heart rates and high nausea incidence, based on a small study. This reassures investors about Eli Lilly's competitive edge.
Citi's Broader Pharmaceutical Preferences
The positive stance on Eli Lilly aligns with Citi's broader preferences within the pharmaceutical sector. Among U.S. companies, Eli Lilly is ranked alongside Merck as a top choice. In Europe, Citi favors stocks like Novo Nordisk, Sanofi, GlaxoSmithKline, and UCB, reflecting a strategic selection of companies with robust growth prospects.
Implications for Investors
Citi's renewed focus and bullish stance on Eli Lilly underscore confidence in the company's future, particularly given advancements in diabetes and obesity solutions. Investors looking to tap into the pharmaceutical market may find Eli Lilly's prospects appealing, supported by strong research and market analysis.
