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Why Eli Lilly (LLY) Stock Is Falling Today

NEW YORK (TheStreet) -- Eli Lilly (LLY - Get Report) shares are down -0.5% to $59.42 on Wednesday after the company said that its liver cancer treatment, Cyramza, failed to meet its primary goals in a Phase 3 study.

Rates of survival from patients who received the Cyramza treatment and those who received placebos were statistically insignificant, according to the company.

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TheStreet Ratings team rates LILLY (ELI) & CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate LILLY (ELI) & CO (LLY) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • LLY's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.35, which illustrates the ability to avoid short-term cash problems.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The gross profit margin for LILLY (ELI) & CO is currently very high, coming in at 81.34%. Regardless of LLY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.54% trails the industry average.
  • LLY, with its decline in revenue, underperformed when compared the industry average of 5.3%. Since the same quarter one year prior, revenues fell by 16.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: LLY Ratings Report
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