Eli Lilly ‘s new diabetes drug, which can additionally tackle weight problems in sufferers, might result in much more positive aspects for the corporate’s inventory, in keeping with SVB Securities. Analyst David Risinger initiated protection of Eli Lilly with an outperform score, saying in a Sunday word that buyers are failing to cost within the potential of tirzepatide, or Mounjaro, as remedies for diabetes and weight problems. Mounjaro was lately authorised by the Meals and Drug Administration to deal with Sort 2 diabetes, and is being investigated for potential use for weight problems. “We consider that consensus underappreciates the gross sales potential for Lilly’s recently-approved tirzepatide (model title Mounjaro) for diabetes and weight problems, and we anticipate upward estimate revisions to drive inventory outperformance,” Risinger wrote. SVB Securities additionally issued a $341 worth goal, representing practically 14% upside from Friday’s closing worth. Shares of Eli Lilly have outperformed this yr, up 8% yr up to now whereas the S & P 500 is down 18% over the identical time interval. Nevertheless, analysts consider they’ve additional to go, particularly if tirzepatide is roofed by employers for weight reduction. “Employers traditionally hesitated to cowl weight problems medication as a result of they view them as aesthetic brokers which didn’t yield significant well being advantages,” Risinger wrote. “However what’s game-changing about tirzepatide is its potential to rework general affected person well being by driving such vital weight reduction.” SVB analysts are additionally bullish on the corporate’s drug pipeline past tirzepatide. The corporate has extra remedies addressing diabetes and weight problems, in addition to heart problems, the word stated. Notably, they’re extra skeptical on the corporate’s therapy for Alzheimer’s. “We’re recommending LLY shares regardless of the inventory’s excessive valuation as a result of we consider the corporate’s potential to rework the therapy of weight problems is underappreciated, and even when Alzheimer’s information circulation is unfavorable, we see significant optimistic optionality in different pipeline candidates,” the word learn. Shares of Eli Lilly popped 1% in Monday premarket buying and selling. —CNBC’s Michael Bloom contributed to this report.
The Eli Lilly emblem is proven on one of many firm’s workplaces in San Diego, California, September 17, 2020.
Mike Blake | Reuters
Eli Lilly’s new diabetes drug, which can additionally tackle weight problems in sufferers, might result in much more positive aspects for the corporate’s inventory, in keeping with SVB Securities.