Analysts at Swiss bank UBS Group (UBS) are urging investors to buy Eli Lilly (LLY) stock after the pharma giant announced that it is paying $7 billion to acquire cancer drug maker Kelonia Therapeutics.
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UBS reiterated a Buy rating on LLY stock with a $1,250.00 price target following news of the company’s latest acquisition. The UBS price target is nearly 40% higher than where the stock currently trades. Analysts at the bank said they approve of the Kelonia purchase as it will strengthen Eli Lilly’s pipeline of cancer drugs and treatments.
Eli Lilly announced the acquisition of Kelonia Therapeutics for an upfront cost of $3.25 billion and a total purchase price of $7 billion. Kelonia is a leading maker of drugs to treat cancers such as myeloma. The purchase of Kelonia is one of several recent acquisitions by Eli Lilly, which bought Orna Therapeutics in February of this year.
The Bull Case for LLY Stock
UBS views the Kelonia Therapeutics deal as constructive for Eli Lilly over the long-term. In particular, UBS thinks that the Kelonia acquisition will help Eli Lilly diversify and lessen its reliance on its weight-loss medications.
On April 1, Eli Lilly received U.S. regulatory approval for its new weight-loss pill called Foundayo. The company is now in the process of ramping up sales and marketing of the oral obesity medication. UBS sees Foundayo as a blockbuster drug that should drive Eli Lilly’s financial results for years to come.
Is LLY Stock a Buy?
The stock of Eli Lilly has a consensus Strong Buy rating among 19 Wall Street analysts. That rating is based on 16 Buy, two Hold, and one Sell recommendations issued in the last three months. The average LLY price target of $1,247.38 implies 31.53% upside from current levels.
