Eli Lilly (LLY)

Sep 23, 2022Trade Ideas

Keep an eye on Eli Lilly (LLY).

Even at $310 a share, the stock could see further upside. All thanks to its treatment for diabetes and obesity, which UBS says could be one of history’s “best selling drugs.”

UBS analyst Colin Bristow also upgraded the stock to a buy rating. Bristow believes Eli Lilly’s drug, Tirzepatide, marketed as Mounjaro is being undervalued by the Street.

As noted by Barron’s: “Mounjaro numbers need to come up,” said Bristow. Analysts’ consensus forecast as reported by Visible Alpha is for annual worldwide sales of Mounjaro to peak at $15.4 billion, according to a research note he published on Thursday. He expects sales to reach $25 billion, up from $20 billion earlier.

“Bristow’s thesis is simple: Treating 1.6 million Americans annually would equate to $20 billion in U.S. sales. And that is still less than 2% of the estimated obese population in the U.S., he said. Usage is likely to be higher partly because the drug has strong trial results and a favorable position in terms of competition, he said, noting that management said on an earnings call that demand is robust,” they added.

We’ve mentioned Eli Lilly before. On September 6, 2022, we noted, “LLY is sitting at major support dating back to early August 2022. It’s also becoming oversold on RSI, MACD, and Williams’ %R. From a current price of $301.33, we’d like to see the LLY stock challenge prior resistance around $325.75 initially. Helping, analysts at BMO Capital just raised their price target to $396 from $369.”

At the time, LLY traded around $303. Today, the stock is up to $310.87, and could potentially challenge prior resistance around $320 next.

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