UBS maintains Eli Lilly stock Buy rating, $1050 target

On Monday, UBS reiterated its Buy rating and $1,050.00 price target for Eli Lilly (NYSE:LLY), a pharmaceutical giant with a market capitalization of $698 billion and impressive revenue growth of 36% over the last twelve months. According to InvestingPro data, analysts’ price targets range from $650 to $1,190, with a strong consensus rating of 1.76 (Buy). The focus is on the Phase 3 SURPASS-CVOT trial, which is comparing Mounjaro (tirzepatide) to Trulicity (dulaglutide) in patients with type 2 diabetes (T2D). The trial outcome, expected by June 2025, is highly anticipated as it aims to establish whether Mounjaro is non-inferior or superior to Trulicity. While trading at a premium P/E ratio of 62.29, Eli Lilly appears overvalued according to InvestingPro’s Fair Value analysis.

The primary endpoint of the trial is MACE-3, a composite of major adverse cardiovascular events. UBS noted that there is considerable concern among investors about whether Mounjaro will demonstrate superiority over Trulicity. Should the trial fail to meet the set thresholds, which UBS believes is unlikely, it could lead to resistance from payers. On the flip side, if Mounjaro proves to be superior, it could potentially expand access for T2D treatments and might positively impact the current pricing dynamics.

As of February 1, 2025, Mounjaro had achieved 90% access in the U.S. across commercial and Part D markets. A result demonstrating non-inferiority to Trulicity would likely sustain the existing access levels for T2D treatments, considering Mounjaro’s successful performance in previous trials against Ozempic (SURPASS-2/SURMOUNT-5). However, UBS also suggests that a non-inferiority outcome could lead to a slightly more challenging pricing environment.

UBS has conducted a statistical analysis and concluded that there is a strong probability that Mounjaro will achieve superiority in the SURPASS-CVOT trial. This analysis underpins their continued confidence in the stock and the maintained price target and rating. Eli Lilly’s stock outlook remains positive as the market awaits the trial results, which could have significant implications for the company’s positioning in the T2D treatment landscape. The company maintains an excellent overall financial health score of 3.02 (GREAT) according to InvestingPro, which offers comprehensive analysis and 13 additional ProTips for this prominent pharmaceutical player.

In other recent news, Eli Lilly has shared positive results from its Phase 1 trial of the investigational drug LY4170156 for advanced ovarian cancer. The trial demonstrated a favorable safety profile and an objective response rate of 55% at the suggested Phase 2 dose. Meanwhile, analysts from TD Cowen have adjusted their price target for Eli Lilly, lowering it to $960 from $1,050, while maintaining a Buy rating. This adjustment follows an analysis related to the upcoming SURPASS-CVOT trial results. Erste Group has also downgraded Eli Lilly’s stock from a Buy to a Hold, citing concerns over future earnings projections. The company’s earnings per share forecast for 2025 has been adjusted to a range of $20.2 to $21.7. UBS, on the other hand, continues to maintain a Buy rating for Eli Lilly with a price target of $1,050. These developments reflect a mix of optimism and caution among analysts regarding Eli Lilly’s future performance.

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