Jefferies Downgrades Eli Lilly to “Underperform” (LLY)

Analysts at Jefferies downgraded pharmaceutical company Eli Lilly & Co. (LLY) early on Friday, due to disappointment in the research and development in its product pipeline.

The analysts downgraded LLY from “Hold” to “Underperform” and now see shares reaching $40, down from the previous target of $49. This new price target suggests a 19% downside to the stock’s Thursday closing price of $49.15.

“We have downgraded Eli Lilly to Underperform from Hold following further R&D disappointment in its pipeline (ramucirumab in breast cancer) as well as the increased strain this will put on future cash flow allocation required to maintain the dividend,” analyst Jeffrey Holford commented. “We see Eli Lilly as one of the strongest bond proxies in the group and see likely pressure on valuation once tapering likely increases in visibility over the next 12 months. Eli Lilly is now our least preferred US stock.”

Eli Lilly shares were down 60 cents, or 1.22%, during pre-market trading on Friday. The stock is down 0.34% year-to-date.