Key insights
- BMO Capital reiterates an Outperform rating on Eli Lilly (LLY) following its acquisition of Centessa, citing diversification benefits and financial strength. The acquisition expands Lilly's neuroscience portfolio with Centessa's lead asset, cleminorexton. While positive, the impact on the broader US equity market is limited.
Investing.com - BMO Capital reiterated an Outperform rating and $1,300 price target on Eli Lilly (NYSE:LLY) shares following the company’s acquisition announcement. The target aligns with InvestingPro analysis, which indicates the stock is currently undervalued at $915.89, suggesting potential upside for investors.
Eli Lilly announced plans to acquire Centessa for an upfront value of $6.3 billion plus a potential contingent value right of $1.5 billion. The deal expands Lilly’s presence in neuroscience and continues its diversification beyond metabolic treatments. The $820 billion pharmaceutical giant demonstrated its financial strength with 44.7% revenue growth over the last twelve months, supporting such strategic acquisitions.
The acquisition gives Lilly access to cleminorexton, Centessa’s lead asset. The drug is being evaluated across narcolepsy type 1, narcolepsy type 2, and idiopathic hypersomnia.
BMO Capital views the deal as positive for Lilly shares. The firm said the company is acquiring from a position of strength and diversifying its business ahead of any major loss of exclusivity events.
The pharmaceutical company continues to expand its portfolio through strategic acquisitions in therapeutic areas beyond its core metabolic franchise. For deeper insights into Lilly’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available for this and 1,400+ other US equities on InvestingPro.
In other recent news, Eli Lilly has announced a significant acquisition of Centessa Pharmaceuticals, a clinical-stage company focused on treatments for sleep-wake disorders. The deal is valued at up to $47.00 per share, with an upfront cash consideration of approximately $6.3 billion and a contingent value right that could add an additional $1.5 billion. In another development, Eli Lilly has entered a drug discovery agreement with InSilico, potentially worth up to $2.75 billion. This agreement includes an upfront payment of $115 million and additional milestone payments. Additionally, Eli Lilly is in discussions with the UK government, seeking higher NHS drug prices to resume its investment in the region. Meanwhile, Guggenheim has adjusted its price target for Eli Lilly to $1,163, maintaining a Buy rating while forecasting first-quarter 2026 revenues of $17,590 million and earnings per share of $7.26. Lastly, Eli Lilly reported positive results from a Phase 3b clinical trial evaluating the combination of Taltz and Zepbound for treating psoriatic arthritis. These developments highlight Eli Lilly’s active involvement in strategic partnerships, acquisitions, and clinical advancements.
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