This Analyst Sees Potential Downside In Eli Lilly, Adjusts Model For Acquired IPR&D Charges

Core Viewpoint - Cantor Fitzgerald analyst Louise Chen maintains an Overweight rating on Eli Lilly And Co (LLY) with a price target of $885, anticipating significant growth driven by upcoming product approvals and acquisitions [1]. Financial Performance - Eli Lilly is expected to report its second-quarter FY24 earnings on August 8, which will include acquired IPR&D charges of approximately $154 million on a pre-tax basis, impacting both GAAP and non-GAAP earnings per share by about $0.14 [1]. Product Development and Approvals - The company anticipates U.S. approval for Lebrikizumab to treat atopic dermatitis in the second half of 2024 [1]. - By the end of 2024, Eli Lilly expects results from the SURMOUNT-5 study comparing tirzepatide to high-dose semaglutide in participants with obesity [2]. - Regulatory action from the U.S. FDA regarding tirzepatide for moderate-to-severe OSA and obesity is expected by the end of this year [2]. Acquisitions and Collaborations - The analyst expects the Morphic acquisition to close in the third quarter of 2024, with Morphic's lead program focusing on a selective oral small molecule inhibitor for the treatment of inflammatory bowel disease (IBD) [1]. Competitive Landscape - Key competitive readouts to watch include Novo Nordisk's semaglutide in MASH, Akero Therapeutics' efruxifermin, and Novo Nordisk's CagriSema Phase 3 program for obesity [2].