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Lilly (LLY) Hits 52-Week High, Can the Run Continue?

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Have you been paying attention to shares of Eli Lilly and (LLY)? Shares have been on the move with the stock up 7.7% over the past month. The stock hit a new 52-week high of $120.14 in the previous session. Eli Lilly and has gained 3.6% since the start of the year compared to the 5.6% move for the Zacks Medical sector and the -0.5% return for the Zacks Large Cap Pharmaceuticals industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its las t earnings report on November 6, 2018, Lilly reported EPS of $1.39 versus consensus estimate of $1.37.

For the current fiscal year, Lilly is expected to post earnings of $5.87 per share on $24.46 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $6.73 per share on $25.53 billion in revenues. This represents a year-over-year change of 5.17% and 4.38%, respectively.

Valuation Metrics

Lilly may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Lilly has a Value Score of C. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 20.4X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 21.6X versus its peer group's average of 12.6X. Additionally, the stock has a PEG ratio of 1.83. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Lilly currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Lilly fits the bill. Thus, it seems as though Lilly shares could still be poised for more gains ahead.

How Does Lilly Stack Up to the Competition?

Shares of Lilly have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Bristol-Myers Squibb (BMY), H Lundbeck A/S (HLUYY), and Celgene (CELG), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Lilly. Still, the fundamentals for Lilly are promising, and it still has potential despite being at a 52-week high.

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Eli Lilly and Company (LLY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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