Why Eli Lilly (LLY) Stock May Be Lower Today

NEW YORK (TheStreet) -- Shares of Eli Lilly & Co. (LLY) may fall today after a jury ordered the company to pay $3 billion and Takeda (TKPYY) to pay $6 billion in punitive damages over allegations that they hid the cancer risks associated with the diabetes therapy Actos.

Lilly could be spared as Takeda agreed to indemnify Lilly for any legal liability connected to Actos. The award may also be reduced on appeal.

Lilly shares are down -1.57% to 57.50 in premarket trade.

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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, good cash flow from operations, expanding profit margins and increase in stock price during the past year. 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 0.30 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 1.06, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has slightly increased to $1,726.80 million or 7.79% when compared to the same quarter last year. Despite an increase in cash flow, LILLY (ELI) & CO's average is still marginally south of the industry average growth rate of 11.22%.
  • The gross profit margin for LILLY (ELI) & CO is currently very high, coming in at 82.18%. 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 12.52% trails the industry average.
  • LLY, with its decline in revenue, slightly underperformed the industry average of 0.5%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: LLY Ratings Report

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