Eli Lilly Worth Long-Term Risk Investment

Current shareholders should hold Eli Lilly (LLY) long-term; interested investors should consider late October as an opportune entry point. Eli Lilly recently had the most successful clinical trials to date for an Alzheimer’s treatment. Despite the overall shortcomings of the trials, the recent results create hope for the stock if FDA approves or offers a positive review of the treatment for mild Alzheimer’s. Eli Lilly needs this hope as its revenues and earnings are being negatively impacted by the recent patent expiration of Zyprexa. Eli Lilly has also had relatively successful trials regarding treatments for lung cancer, two different treatments for diabetes, and an expansion for Cialis in Europe. Washington University recently chose Eli Lilly’s product for a long-term study to gauge experimental drugs’ efficacy on people with genetic predispositions for Alzheimer’s.

Pfizer (PFE), GlaxoSmithKline (GSK), AstraZeneca (AZN) and Bristol-Myers & Squibb (BMY) are most comparable to Eli Lilly due to mutual interests or similar market cap size. Eli Lilly’s price is around 14 times earnings, Pfizer’s price is around 22 times earnings, and AstraZeneca’s price is around 7.3 times earnings. Eli Lilly’s $3.61 EPS is second-highest to AstraZeneca’s $6.24 EPS, Pfizer’s $1.15 EPS is the lowest among these pharmas. Eli Lilly’s 14.8% EPS decline in 2012 is the worst among the firms; its 11.5% projected EPS growth for 2013 is the highest among the firms. GlaxoSmithKline’s 223% EPS growth for 2012 is the highest among these firms.

Eli Lilly’s 1.76% float short and 2.5 short ratio are only lower than Bristol-Myers 2.29% float short and 3.5 short ratio. To continue reading, click here.