© Reuters. Amgen & Eli Lilly upgraded to Overweight at Wells Fargo, Merck downgraded to Equal Weight
Wells Fargo upgraded Amgen (AMGN) and Eli Lilly (LLY) and downgraded Merck (MRK).
Amgen upgraded to Overweight from Equal Weight with a $265.00 price target (from $275.00) as the firm believes pessimism related to the company’s post-Horizon Therapeutics deal has caused weakness, and now sees the stock trading about 7-8% below. the worst case.
“After combining AMGN-HZNP, we see the company’s FV at $247 in a scenario of US growth without Tepezza and modest growth elsewhere; the stock trades below this level. Our base case assumes modest US growth and peak sales of $5 billion for HZNP, which is much lower than HZNP’s previous guidance of a peak of $6.5 billion,” the firm said.
Stocks gained more than 2% today.
Eli Lilly (LLY) has upgraded to Overweight from Equal Weight with a $375.00 price target (from $360.00) as recent weakness creates a buying opportunity.
The company’s previous Weight Equality thesis was based on unfavorable risk/reward for donanemab Alzheimer’s data in H1 2023 and stock price just right for diabetes/obesity franchise.
Wells Fargo believes that the stock, down 18% (S&P -5%) with no fundamental changes, presents a good opportunity given a strong R&D engine, no loss of exclusivity in the short to medium term, and that it is not dependent on mergers and acquisitions to grow.
Shares were up 3% today.
Meanwhile, Merck has been downgraded to Equal Weight from Overweight with a $115.00 price target, as the firm believes that with recent stock appreciation, Merck appears to be fairly valued at ~16x 2023 PE given it still has Keytruda related LOE issues to resolve.
Shares fell nearly 2% today.
By Davit Kirakosyan
