FDA Nudge Sends Pharma Stock to Fresh Record Highs

LLY options are looking cheap at the moment, too

Managing Editor
Jun 11, 2024 at 10:00 AM
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Shares of Eli Lilly And Co (NYSE:LLY) are enjoying a 2.3% surge this morning, last seen trading near $885.10 on the back of news that the Food and Drug Administration (FDA) panel unanimously approved the pharmaceutical company's Alzheimer's drug, donanemab. The FDA cited effectiveness and a beneficial risk/reward outcome.

In response, several analysts have donned praise, Jefferies hiking its price target to $994 from $957, saying the FDA backing is a good look for future label/screening equipment. Heading into today analysts are mostly bullish, with 19 of the 22 in coverage sporting a "buy" or "strong buy" recommendation. There is still room for more price-target hikes, with the stock's 12-month average price target coming in at $863.75, 2.5% below Monday's close.

LLY has been an exceptional outperformer on the charts, up 94% over the last 12 months and 50% since the start of 2024. The stock is now eyeing its 10th win in 11 days, and out of the gate today hit a new record high of $882.14. Longer-term, a trendline of support has been found at the ascending 80-day moving average.

Options are looking affordable too. This is per the stock's Schaeffer's Volatility Index (SVI) of 26%, which ranks in the 29th percentile of its annual range, meaning options traders are pricing in low volatility expectations at the moment.

 

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