SVB Securities believes that Eli Lilly’s new diabetes medication, which can also help with obesity, could bring even greater gains to the stock. David Risinger, analyst at SVB Securities, began coverage of Eli Lilly. Risinger stated that investors are not pricing in potential treatments such as Mounjaro and tirzepatide for diabetes. Mounjaro, which was approved recently by the Food and Drug Administration for Type 2 diabetes treatment, is now being examined for its potential use as a weight loss therapy. Risinger said, “We think consensus underestimates Lilly’s recent approval of tirzepatide brand name Mounjaro for Type 2 diabetes. We expect upward estimates revisions to drive stock performance.” SVB Securities issued a price target of $341, which represents nearly 14% more than Friday’s close price. Shares of Eli Lilly have outperformed this year, up 8% year to date while the S & P 500 is down 18% over the same time period. Analysts believe that they still have a lot to do, particularly if employers cover tirzepatide for weight loss. Risinger stated that employers have historically been reluctant to pay for obesity drugs, citing them as “aesthetic agents” which do not provide meaningful health benefits. The most exciting thing about tirzepatide, Risinger said is the ability of it to dramatically improve patient health through weight loss. SVB analysts also believe in the company’s pipeline of drugs beyond tirzepatide. It has more options to treat obesity and diabetes, along with cardiovascular diseases, according to the note. The company’s Alzheimer treatment is a subject they are less skeptical of, notably. The note stated that LLY shares were recommended despite their high stock valuation. “We believe the company has the ability to transform obesity treatment and we also see significant positive options in other pipeline candidates.” In Monday’s premarket trading, Eli Lilly stock rose 1%. —CNBC’s Michael Bloom contributed to this report.
On September 17, 2020, the Eli Lilly logo was displayed on one of Eli Lilly’s San Diego offices.
Reuters| Reuters
Eli LillyAccording to SVB Securities, the new drug for diabetes, which could also treat obesity, may bring even greater gains to stock.
