7 Catalysts For Eli Lilly Over The Next Year

Credit Suisse in a note Monday listed seven catalysts for Eli Lilly and Co LLY shares over the coming year even as it downgraded the shares of the company on the pretext that there are limited drivers of further upside after the stock's recent run, which lifted it by 13 percent since mid-August.

As such, the firm downgraded shares of Eli Lilly from Outperform to Neutral but maintained its price target for the shares at $88.

At time of writing, Eli Lilly shares were sliding 1.30 percent to $85.91.

Analysts Vamil Divan, Michael Morabito, Barbara Kotei and Duaa Mohamed discussed several factors that prompted them to have below-consensus estimates for the company. Notwithstanding the risk factors, the analysts see a few catalysts over the coming year. The catalysts include:

1. FDA Ad Comm Meeting due on Oct. 18 and PDUFA Action date on Dec. 5 for Novo's semaglutide.
2. Eli Lilly's third-quarter earnings due on Oct. 24.
3. Fiscal year 2018 guidance to be released on Dec. 13.
4. Top-line Verzenio JUNIPER data for NSCLC in the second half of 2017.
5. Top-line KEYNOTE-189 data for Alimta + Keytruda in 1L non-squamous NSCLC in the second-half of 2017.
6. Verzenio commercial uptake.
7. Resubmission for Olumiant for rheumatoid arthritis by January 2018 and a likely FDA approval by mid-2018.

See also: Attention Biotech Investors, Here's Your PDUFA Primer For October

The risk factors the analysts are wary about including their below-consensus sales forecast for Basaglar and, over time, for Humalog as well. The analysts also assume a slower ramp for Verzenio following its recent FDA approval, given the competition in the space. Verzenio is indicated to treat advanced or metastatic breast cancer.

The analysts also adjusted their expense forecasts due to the loss of patent protection for two higher margin drugs, namely Strattera and Cialis.

Credit Suisse expects sales to be flat in 2018 due to patent expiries, before returning to growth. The firm expects 2015–2020 sales to grow at a CAGR of about 4 percent as opposed to the company's guidance of 5 percent, plus.

Although the firm sees an expansion in operating margin from about 25 percent in 2017 to 30.6 percent in 2010, it left its earnings per share estimates for the 2018–2020 timeframe below 2–3 percent below the Street.