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NEW YORK (TheStreet) -- Shares of pharmaceutical giant Eli Lilly (LLY) - Get Free Report rallied 6.5% yesterday after the company reported data from a study of its type 2 diabetes drug, but analysts see significantly more room for the stock to run following the "extraordinary" trial results.

BACKGROUND: Yesterday, Eli Lilly and partner Boehringer Ingelheim reported that Jardiance, an oral medication that belongs to a class of drugs called sodium-glucose co-transporter-2, or SGLT2, inhibitors, "significantly reduced the risk" of the combined endpoint of cardiovascular death, non-fatal heart attack or non-fatal stroke by 14% when added to standard of care in patients with type 2 diabetes at high risk of CV events. There was a 38% reduction in CV death, with no significant difference in the risk of non-fatal heart attack or non-fatal stroke, the companies added. Other SGLT2 inhibitors include AstraZeneca's (AZN) - Get Free Report Farxiga and Janssen Pharmaceuticals' (JNJ) - Get Free Report Invokana. Januvia, which is marketed by Merck (MRK) - Get Free Report , is an oral anti-diabetic drug from another class, the dipeptidyl peptidase-4, or DPP-4, inhibitor class. Other DPP-4 inhibitors currently on the market include AstraZeneca and Bristol-Myers' (BMY) - Get Free Report Onglyza and Novartis' (NVS) - Get Free Report Galvus.

EXTRAORDINARY DATA: Piper Jaffray analyst Richard Purkiss views yesterday's cardiovascular outcomes data for Eli Lilly's Jardiance in type 2 diabetics as "nothing short of extraordinary." Highlights are a 32% reduction in all-cause mortality and a lower serious adverse event rate than placebo, Purkiss told investors in a research note. Since Jardiance is the first anti-diabetic drug to ever show a CV outcomes benefit in a single study, it will likely be used in front of other drug classes in the management of type 2 diabetes, Purkiss contends. He keeps an Overweight rating on Eli Lilly with a $120 price target.

$6B PEAK SALES: Jefferies analyst Jeffrey Holford raised his price target for shares of Eli Lilly to $115 from $105 after upping his peak sales estimate for the Jardiance/Glyxambi franchise to $6B from $1.2B. Jardiance "missed" Street expectations yesterday of a 20% relative risk reduction on the primary composite outcome, but the 14% reduction in cardiovascular death or nonfatal stroke is still clinically relevant, Holford told investors. The analyst expects the SGLT2 class will overtake, but not destroy, the DPP-4 class, with Eli Lilly as the leader. He keeps a Buy rating on the stock.

PRICE ACTION: Eli Lilly closed yesterday up $5.46 to $89.91. Before yesterday's rally, the stock had been flat over the prior three months.

Reporting by Jason Keil.

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