Eli Lilly’s Stock Performance Overview
Eli Lilly (NYSE:LLY) saw its stock close lower on Monday after experiencing a volatile trading session. Initially, the company’s shares rose following an upgrade from Deutsche Bank analysts. However, the stock reversed its gains due to news of a significant bond sale to finance its acquisition of Morphic.
Analyst Upgrade and Early Gains
Deutsche Bank analysts recently upgraded Eli Lilly’s stock to a buy rating, citing the company’s strong performance and growth potential. This upgrade was partly attributed to the impressive sales figures for Lilly’s weight-loss drug Mounjaro, which surged to $3.09 billion in revenue, more than tripling from previous periods. Following the upgrade, the price target for Lilly’s shares was raised to $1,025 from $725, a nearly 15% premium over the stock’s Friday closing price. Early Monday, Lilly’s shares climbed above $904.
Bond Sale to Fund Acquisition
The stock’s early gains were offset by news that Eli Lilly plans to sell $5 billion in bonds to fund its $3.2 billion acquisition of Morphic (NASDAQ:MORF). The sale, which was confirmed in a regulatory filing, will involve issuing bonds in five tranches, including a 40-year note with a yield 1% higher than U.S. Treasury notes. This higher yield reflects the increased risk associated with corporate bonds compared to government securities.
The acquisition, announced last month, will add Morphic’s leading drug for inflammatory bowel disease to Lilly’s portfolio. The deal also expands Lilly’s pipeline to include treatments for autoimmune diseases, pulmonary hypertensive diseases, fibrotic diseases, and cancer.
Conclusion
Despite the positive analyst upgrade, Eli Lilly’s stock ended the day lower due to concerns over the large bond sale and its impact on the company’s financials. The stock closed less than 1% down, reflecting the market’s reaction to both the acquisition and the funding strategy.
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