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Any More Upside in Eli Lilly?
Posted by: matsandalex (IP Logged)
Date: October 10, 2012 09:31AM

Shares of Eli Lilly (LLY) recently hit a four-high after some positive test results about its new Alzheimer's drug,
solanezumab.

Barrons reported, "About 30% of patients with early-stage of Alzheimer’s showed benefits to memory and after taking solanezumab in a recent study, researchers announced at a conference on Monday. The drug hasn’t been approved by the FDA, and the company has not yet discussed the steps it will take to attempt to win approval."

The next question is whether the drug will be approved by the FDA which would mean that LLY would have the first pharma blockbuster drug in many years.

Shares have climbed 45% this year, making LLY the hottest big-cap pharma stock in the world right now.

The company is no longer a bargain from a PE perspective. The company increased its EPS guidance for the fiscal year 2012 from a range of $3.15 to $3.30, to $3.30 to $3.40. Shares now trade at the upper PE range of comparable pharma companies.

However, LLY features a strong balance sheet and healthy dividend of 4.4%. The company has a debt-to-equity of 38%.

The company is largely tied to the Alzheimer's drug development. To give one an idea of the market size, there are over 5 million people affected by the disease in the U.S alone. In addition, Alzheimer's is ranked sixth leading cause of death in the U.S.


Stocks Discussed: LLY,
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