Why Analysts Still Favor Eli Lilly and Company Stock

Analysts’ recommendations and target price

Wall Street analysts have set Eli Lilly and Company’s (LLY) 12-month consensus target price at $122, 2.59% lower than the company’s closing price on March 18. Despite this difference, analysts’ consensus recommendation for the stock remains a “buy.” In 2019, analysts have revised the company’s target price upward twice, from $117.73 in January to $120.07 in February and then to $122.00 in March.

To learn about what’s driving analysts to favor Eli Lilly in 2019, read What Are the Key Growth Drivers for Eli Lilly in Fiscal 2019?

Why Analysts Still Favor Eli Lilly and Company Stock

Of the 17 analysts covering Eli Lilly, two have given it “strong buys,” six have given it “buys,” and nine have given it “holds.”

On March 18, Eli Lilly closed at $125.24, 1.05% higher than its previous closing price, 68.08% higher than its 52-week low of $74.51, and 4.21% lower than its 52-week high of $130.75. The company’s market cap is $128.78 billion.

Based on its closing price on March 18, Eli Lilly has reported returns of 1.41% in the last week, 3.72% in the last month, and 9.04% in the last quarter. The company has reported returns of 17.51% in the last half year, 59.03% in the last year, and 8.23% year-to-date.

Change in structure

In September 2018, Eli Lilly divested ~20% of its stake in its animal health business, Elanco (ELAN), in an IPO. In February 2019, Eli Lilly initiated an exchange offer to completely divest its stake in Elanco. The company expects this deal to be almost tax-free for its shareholders.

On March 7, 2019, Eli Lilly issued a press release announcing the final exchange ratio of 4.5121 for the deal. On March 13, it issued another press release to announce that the exchange offer had been oversubscribed.

Following the successful completion of Elanco’s spin-off deal, Eli Lilly will be focusing exclusively on its human pharmaceutical business, which features robust growth assets such as Emgality, Verzenio, Olumiant, Lartruvo, Taltz, Basaglar, Jardiance, Trulicity, and Cyramza.