Drug Stock Upgraded Despite Coronavirus Threat

Eli Lilly holds on to its potential despite broad market headwinds

Deputy Editor
Mar 11, 2020 at 11:02 AM
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Eli Lilly and Co (NYSE:LLY) is up 0.3% to trade at $140.81 at last check, shaking off the broader market sell-off thanks to some bullish analyst attention. The drug manufacturer was just added to the "Conviction Buy" list at Goldman Sachs, with the brokerage firm waxing optimistic that LLY has one of the strongest potentials for growth despite the coronavirus. Also boosting Eli Lilly -- as one of the three main creators of insulin -- is the Trump Administration proposed plan to cut insulin copay down to $35 dollars. 

Eli Lilly stock was climbing higher to start 2020, culminating in a Feb 6 record high of $147.87. The shares have since pulled back with the broader market, although a bounce off their 160-day moving average has resulted in a 7.5% year-to-date gain.

Calls are winning in the options pits, as Eli Lilly sports at 10-day call/put volume ratio of 3.52 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Not only does this mean that calls outnumber puts by a more than three-to-one ratio, but that ratio sits higher than 97% of readings from the past year, indicating that such a call skew is rare.

Today's bull note is indicative of the broader analyst setup, with six out of the eight in coverage rating LLY a "strong buy," and zero "sells" on the books. Plus, short interest has dropped 5.6% in the last two reporting periods, and accounts for a minor 1.5% of the available float. 


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