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What Are Analysts Recommending for Eli Lilly and Loxo Oncology?

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Jan. 8 2019, Updated 10:00 a.m. ET

Deal implications

Eli Lilly and Company (LLY) has entered into an agreement to acquire Loxo Oncology (LOXO) for a net consideration of $7.2 billion, excluding the latter’s cash and other investments.

According to Eli Lilly’s investor presentation, the company doesn’t expect the transaction to affect its dividend policy. Additionally, according to its M&A (mergers and acquisitions) conference call, the company expects a modest negative impact from the deal on its near-term margins, but it remains confident in achieving its 2020 operating income target of 31% of total sales. Finally, according to Eli Lilly’s investor presentation, the deal is expected to boost its revenues and margins in future years and to become cash accretive by 2022.

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Target prices for Eli Lilly and Loxo Oncology

The 12-month consensus analyst recommendation for Eli Lilly as of January 8 is a “buy,” while it’s also a “buy” for Loxo Oncology. The 12-month consensus target price for Eli Lilly as of January 8 is $118.19, 2.52% higher than its closing price on January 7. The 12-month consensus target price for Loxo Oncology as of January 8 is $221.44, 4.82% lower than its last closing price on January 7. Eli Lilly’s offer price of $235 per share is 6.12% higher than the consensus target price forecast by Wall Street analysts for Loxo Oncology.

The highest target price estimate for Eli Lilly is $136, and the lowest target price estimate is $93. The highest target price estimate for Loxo Oncology is $235, and the lowest target price estimate is $185. Eli Lilly’s offer price of $235 per share matches the highest target price forecast by Wall Street analysts for Loxo Oncology.

Of the 17 analysts covering Eli Lilly on January 8, 47.06% have given it “buy” recommendations. On the other hand, of the 12 analysts covering Loxo Oncology on January 8, 50% have given it “buy” recommendations.

In the next article, we’ll discuss Eli Lilly’s revenue expectations from its acquisition of Loxo Oncology in greater detail.

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