UBS maintains Eli Lilly stock with $1,050 target

On Thursday, UBS reaffirmed its positive stance on Eli Lilly (NYSE:LLY) shares, maintaining a Buy rating and a price target of $1,050.00. This aligns with the broader Wall Street sentiment, as InvestingPro data shows analyst targets ranging from $650 to $1,190, with a strong buy consensus rating of 1.72 (where 1 is Strong Buy and 5 is Strong Sell). The company maintains a "GOOD" overall financial health score of 2.94 out of 5. The endorsement comes amid broader market concerns about energy demands, with UBS analysts addressing the initial apprehensions caused by DeepSeek and Microsoft (NASDAQ:MSFT)’s reductions in data center capacity. UBS’s analysis points to a sustained demand for natural gas to support existing and forthcoming data center projects. Want deeper insights? InvestingPro subscribers have access to 16+ additional expert tips and comprehensive analysis for Eli Lilly, including detailed valuation metrics and growth forecasts.

The report by UBS suggests that despite the temporary setbacks, the power requirements of data centers are expected to increase. This anticipated growth is backed by several announcements from key industry players, reinforcing UBS’s confidence in the sector’s potential. The firm’s outlook indicates that while the increase in power demand is gradual, it is imminent, which could benefit companies that are leveraged in natural gas midstream operations.

UBS specifically names Williams Companies (NYSE:WMB), Energy Transfer LP (NYSE:ET), Kinder Morgan Inc (NYSE:KMI), DT Midstream Inc (NYSE:DTM), TC Energy Corporation (NYSE:TRP), and Enbridge Inc (NYSE:ENB) as entities likely to experience a tailwind from this development. These companies are involved in the transportation, storage, and management of natural gas, which is essential for powering the data centers.

Furthermore, UBS highlights Bloom Energy Corp (NYSE:BE) as its preferred company for on-site power generation utilizing natural gas. The firm’s continued support for Eli Lilly, coupled with its insights into the natural gas market and data center energy demands, underscores its expectation of growth in the sector and the potential benefits for associated midstream companies. Notably, Eli Lilly has demonstrated strong financial performance with a revenue growth of 36.4% in the last twelve months and maintains a 55-year track record of consistent dividend payments. Access the complete InvestingPro Research Report for comprehensive analysis of Eli Lilly’s market position, financials, and growth prospects.

In other recent news, Eli Lilly announced its acquisition of SiteOne Therapeutics in a deal valued at up to $1 billion, aiming to enhance its portfolio in the pain management sector. This acquisition includes SiteOne’s STC-004, a Phase 2 ready Nav 1.8 inhibitor, which is a non-opioid treatment for chronic pain. Eli Lilly’s financial advisor for the transaction is J.P. Morgan Securities LLC, while legal counsel is provided by Jones Day. In another development, the Australian Therapeutic Goods Administration approved Kisunla for treating mild cognitive impairment and mild dementia due to Alzheimer’s disease, based on results from the TRAILBLAZER-ALZ 2 Phase 3 study. Meanwhile, Morgan Stanley (NYSE:MS) maintained its Overweight rating for Eli Lilly with a price target of $1,133, following a new benefit option from Cigna/Evernorth that limits patient copays for Eli Lilly’s Zepbound. BMO Capital also reaffirmed an Outperform rating on Eli Lilly with a $900 price target, citing the strategic acquisition of SiteOne as a positive move. Additionally, Bernstein analysts reiterated an Outperform rating and a $1,100 price target, highlighting Eli Lilly’s growing market share in the GLP-1 sector, with notable gains for products like Mounjaro and Zepbound. These developments underscore Eli Lilly’s ongoing efforts to expand its therapeutic offerings and strengthen its market position.

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