Is Eli Lilly or LLY Stock a Buy or Sell?
Source: Eli Lilly

Eli Lilly Stock Looks Like a Buy on Dips Amid Strong Growth Outlook


Jan. 12 2021, Published 10:09 a.m. ET

On Jan. 11, Eli Lilly stock rose by 11.7 percent, while the S&P 500 fell by 0.7 percent. The stock was up $19.53 from its previous closing price of $166.41 on a volume of 11,188,525 shares. Over the past year, the S&P 500 has risen by 15.7 percent, while Eli Lilly stock has gained 32.2 percent. Is Eli Lilly or LLY stock a buy or sell at this price?

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On Jan. 11, Eli Lilly stock surged significantly after the company announced that its experimental Alzheimer's disease drug, donanemab, slowed the rate of decline in trial patients. In a press release, Eli Lilly said, “Donanemab met the primary endpoint of change from baseline to 76 weeks in the Integrated Alzheimer's Disease Rating Scale (iADRS), slowing decline by 32 percent relative to placebo, which was statistically significant.”

Is Eli Lilly or LLY Stock a Buy or Sell?
Source: Eli Lilly Facebook
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Eli Lilly or LLY on Stocktwits

Eli Lilly stock has become a major talking point on social media platforms. An investor named profit_guru on Stocktwits said that donanemab could have $20 billion in revenue potential after the drug is approved. The investor thinks that LLY stock could reach $250 in the near term. Another investor named sluggowski is betting on LLY stock but thinks that it's overvalued at $185 since it’s a long way from monetization.

Eli Lilly pays a dividend

Eli Lilly stock pays an annual dividend of $3.40 per share with a dividend yield of 1.83 percent.

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LLY’s valuation

On Jan. 11, Eli Lilly stock rose by 11.7 percent and closed at $185.94. At that closing price, the market capitalization was $177.9 billion. Eli Lilly stock trades at a forward PE multiple of 20.58x.

investing in eli lilly
Source: Unsplash
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Eli Lilly or LLY’s stock forecast

Eli Lilly stock has risen by 11.8 percent in the last five days and by 32.2 percent in the last year. The stock is trading 1.8 percent below its 52-week high of $189.30 and 58.8 percent above its 52-week low of $117.06.

According to estimates compiled by CNN, analysts' median target price is $190 for Eli Lilly, which is 2.2 percent above its current stock price. Among the 18 analysts tracking Eli Lilly, 11 recommend a buy, seven recommend a hold, and none recommend a sell. The highest target price of $227 is 22.1 percent above the stock's current price, while the lowest target price of $149 is 19.9 percent below the stock's current price.

Is LLY stock a buy or sell?

Growth investors should consider buying LLY stock on dips since it's overvalued right now. Investors overreacted to the recent clinical trial results. There's a risk that the company’s Alzheimer's disease drug could fail in late-stage trials. Donanemab has a significant addressable market. Currently, nearly 5.5 million Americans suffer from Alzheimer's disease. Income investors can also consider buying LLY stock since it offers a steady dividend. LLY stock isn’t a sell if you already own it.


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