NEW YORK (TheStreet) -- Shares of Eli Lilly and Co. (LLY) are up 2.04% to $72.50 in pre-market trading Thursday morning after Morgan Stanley upgraded company to "overweight" from "underweight" and raised its price target to $85 from $60.
"Recent external data readouts in major disease states, atherosclerosis and Alzheimer's, make us more confident that Lilly management is making the right pipeline investments," analysts said about the Indianapolis-based pharmaceutical products company.
"We envision theoretical peak sales potential of $3 billion plus for evacetrapib and $10 billion plus for solanezumab, representing significant optionality relative to 2015E total company sales of $20 billion," analysts noted.
"We raised our price target from $60 to $85 (22x new '16E EPS of $3.85), driven by boosting EPS, rolling from '15E to '16E, and bumping P/E from 20x to 22x (due to higher LT growth)," analyst added.
Separately, TheStreet Ratings team rates LILLY (ELI) & CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate LILLY (ELI) & CO (LLY) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels 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:
- Compared to its closing price of one year ago, LLY's share price has jumped by 45.13%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LLY should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.11, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for LILLY (ELI) & CO is currently very high, coming in at 81.04%. 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 10.26% trails the industry average.
- LLY, with its decline in revenue, slightly underperformed the industry average of 8.8%. Since the same quarter one year prior, revenues fell by 15.5%. 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