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Why Eli Lilly Stock Fell Yesterday

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Mar. 12 2019, Updated 8:15 a.m. ET

Stock price movements

Yesterday, Eli Lilly (LLY) closed at $123.50, 2.53% lower than its previous closing price, 65.75% higher than its 52-week low of $74.51, and 5.37% below its 52-week high of $130.51. The company’s market capitalization is $127.51 billion, and its PE, forward PE, price-to-sales, and price-to-book ratios are 37.41x, 19.12x, 5.19x, and 12.71x, respectively.

The drop in Eli Lilly’s stock price followed the company’s press release announcing that the exchange offer for Elanco Animal Health (ELAN) is oversubscribed, which was indicative of the robust confidence by investors in its animal health business, a former subsidiary of Eli Lilly. Eli Lilly stock seems to have declined in response to the completion of the spin-off of a high potential yet undervalued business segment.

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Eli Lilly stock has been highly volatile since March 4 after the company issued a press release announcing the introduction of a Humalog version with a list price 50% lower than the drug’s current list price. Based on its closing price on March 11, the company reported returns of -3.11% in the last week, 5.11% in the last month, 6.61% in the last quarter, 17.21% in the last half year, 56.55% in the last year, and 6.72% YTD.

Based on its closing price on March 11, the broader healthcare sector represented by the Health Care Select Sector SPDR ETF (XLV) reported returns of -1.39% in the last week, 0.72% in the last month, -2.70% in the last quarter, -2.15% in the last half year, 6.03% in the last year, and 4.52% YTD. Eli Lilly has outperformed XLV in 2019 YTD.

Analysts’ recommendations and target price

The 12-month consensus recommendation for Eli Lilly is a “buy.” Of the 17 analysts covering Eli Lilly, two recommend a “strong buy,” six recommend a “buy,” and nine analysts recommend a “hold.” The 12-month target price is $122, 1.21% lower than its closing price on March 11. The highest target price estimate for the company is $145, and the lowest is $93.

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