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On Monday, Jefferies maintained a bullish stance on Eli Lilly (NYSE:LLY) shares, reiterating a Buy rating and a price target of $1,020. Currently trading at $851.73, the pharmaceutical giant has demonstrated strong momentum with a 8.68% year-to-date return. The firm’s analyst, Akash Tewari, focused on the anticipated outcomes of the ACHIEVE-1 Phase 3 trial for Eli Lilly’s diabetes treatment, Orfo. According to InvestingPro data, Eli Lilly currently appears overvalued based on its Fair Value analysis, though the company maintains a "GOOD" overall financial health score. Tewari adjusted weight loss (WL) expectations for the 36mg dose of Orfo from the previously estimated 8-10% absolute weight loss at week 40 to a revised 6-8%, based on new information regarding the trial’s protocol and baseline body mass index (BMI) of participants.
The revised projections stem from two key disclosures by Eli Lilly. Firstly, participants in the trial who are unable to reach the target dose due to tolerability issues will be required to discontinue (d/c), which could impact the overall weight loss efficacy in the intent-to-treat (ITT (NYSE:ITT)) population by approximately 1-2%. Secondly, the baseline weight of participants in ACHIEVE-1 could be lower than in previous Phase 2 trials, potentially reducing weight loss efficacy by an additional 1-2%.
Despite these adjustments, Tewari’s expectations for Orfo’s performance in the obesity and non-diabetes mellitus (non-DM) trial, ATTAIN-1, remain unchanged. The analyst anticipates an absolute weight loss of 13-15% at week 72 with the 36mg dose. This potential success could further boost Eli Lilly’s already impressive financial performance, with revenue growing 32% in the last twelve months to $45 billion and maintaining a robust gross profit margin of 81.3%. InvestingPro subscribers can access 13 additional key insights about Eli Lilly’s financial health and market position. Unlike the diabetes trial, the obesity trial protocol permits participants to reduce their dosage without being forced to discontinue, which may support better tolerability and adherence.
Furthermore, the safety profile for Orfo 36mg is expected to show gastrointestinal tolerability similar to Wegovy, with an estimated 15-25% of patients experiencing vomiting. Discontinuation rates are projected to be between 10-20%, with diabetes patients possibly at the higher end of this range due to the mandated discontinuations in the trial protocol.
The ACHIEVE-1 trial results, expected in Q2, are part of several Phase 3 readouts for Orfo slated for this year. These results are highly anticipated and could potentially influence Eli Lilly’s stock performance as the market responds to the developments in the company’s diabetes and obesity treatment pipeline. Analyst consensus remains strongly bullish, with a mean target suggesting 21% potential upside. Get comprehensive insights and detailed analysis through InvestingPro’s exclusive research report, part of their coverage of over 1,400 top US stocks.
In other recent news, Eli Lilly has introduced its diabetes and weight-loss drug Mounjaro in India, positioning itself ahead of competitor Novo Nordisk (NYSE:NVO) in the world’s most populous country. This move comes as India grapples with rising obesity and diabetes rates. Meanwhile, UBS has maintained its rating on Eli Lilly, with a Neutral stance and a price target of $1,100, noting that while the company fell short of expectations for Zepbound and Mounjaro in previous quarters, there is a notable uptick in total prescriptions. UBS highlighted that the sentiment for the first quarter is largely dependent on the performance of GLP-1 products. Bernstein SocGen Group also reaffirmed an Outperform rating for Eli Lilly, citing promising pre-clinical findings of Retatrutide in reducing tumor progression in cancer models. Morgan Stanley (NYSE:MS) has maintained an Overweight rating with a $1,146 target, reflecting confidence in Eli Lilly’s competitive position in the diabetes care market. These developments underscore Eli Lilly’s ongoing efforts in pharmaceutical innovation and market expansion.
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