Eli Lilly (LLY) - Get Report shares were climbing Wednesday after a Morgan Stanley analyst, David Risinger, upgraded the drugmaker to overweight from equal weight and raised his price target to $150 a share from $116.
At last check Lilly shares were 3.5% higher at $129.70.
On Tuesday, Eli Lilly confirmed its 2019 earnings guidance and said revenue would continue to grow in the coming year.
Lilly estimated 2020 revenue at $23.6 billion and affirmed its 2019 earnings guidance, which it had improved in October, at a range of $5.75 to $5.85 a share.
Sales of Trulicity, the company's diabetes treatment, have risen 28% to just under $3 billion, while its severe-plaque-psoriasis drug Talz has booked a 50% gain from 2018, reporting nine-month sales of $340 million.
Risinger said he was raising his long-term estimates, driven by higher revenue and wider profit margins.
While Novo Nordisk (NVO) - Get Report appears poised to win market share in diabetes, Risinger said, "we still expect strong and durable Lilly franchise growth, including benefits from initial high-dose Trulicity sales in 2021 and tirzepatide in 2022."
"We like the direction of R&D leadership, and pipeline optionality (including Alzheimer's) should benefit (Lilly) shares," Risinger wrote.
Chief Scientific Officer Dan Skovronsky "is taking the right steps to further enhance R&D decision making, speed, and productivity," he said.
The analyst said Wall Street underappreciates Lilly's durable growth prospects.
"We are bullish on Lilly's diabetes-franchise prospects," he wrote. "[And] we model total diabetes growing from $11 billion to $15 billion (including pipeline candidates) in 2023."