Citi restarts coverage of Eli Lilly with Buy rating on increased tirzepatide forecasts

Citi reinstated its coverage of Eli Lilly & Co. (NYSE:LLY ) with a Buy rating and a target price of $1,060 per share in a note Friday.

The move follows a period during which the rating was suspended. The analysts at Citi have updated their projections for Eli Lilly, driven by enhanced forecasts for the company's tirzepatide, a treatment for diabetes and obesity.

According to Citi, the increased forecasts for tirzepatide are based on recent sales data, prescription trends, and updated company guidance.

"Our non-GAAP EPS forecasts increase accordingly by up to 19% for 2024-27 and 9-15% thereafter for the forecast period," Citi wrote.

The firm's analysis includes a broad range of valuations, with a bull-bear valuation range of $1,283 to $692 per share.

Citi's note highlights that the competitive landscape for diabetes and obesity treatments has shifted.

The analysts see a "diminished competitive threat from Roche’s oral GLP-1 CT-996," citing issues such as elevated heart rates and high nausea incidence associated with the treatment. This assessment is based on a small study with high variability.

The resumption of coverage and the bullish rating also reflect Citi's preference for Eli Lilly among major U.S. pharmaceutical companies.

The firm ranks Eli Lilly alongside Merck (MRK) as preferred stocks in the U.S. market and includes Novo Nordisk, Sanofi, GlaxoSmithKline (GSK), and UCB among its favored European stocks.

Overall, Citi's updated outlook underscores confidence in Eli Lilly's future performance, particularly given the promising developments in its diabetes and obesity treatments

Source: Investing.com