Can Eli Lilly See Rising Prices?

With shares of Eli Lilly (NYSE:LLY) trading around $53, is LLY an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Eli Lilly discovers, develops, manufactures, and sells pharmaceutical products. The company also has an animal health business segment. It manufactures and distributes its products through facilities in the United States, Puerto Rico, and 15 other countries, and sells its products in approximately 130 countries. Eli Lilly’s offerings include neuroscience products, endocrinology products, oncology products, cardiovascular products, animal health products, and other pharmaceuticals.

Eli Lilly is set to defend the patent on its lung cancer drug Alimta, which accounted for 11 percent of the company’s revenue in 2012. The patent in question covers the practice of administering the drug along with certain vitamins to help prevent side effects. If the company wins the right to keep the patent, generic drug makers won’t be able to make a generic version until 2022. Eli Lilly will lose the patent to its No. 1 drug, the antidepressant Cymbalta, later this year, so keeping the Alimta patent would be a victory for the company.

T = Technicals on the Stock Chart Are Mixed

Eli Lilly stock has been steadily rising in the past several years. The stock is now pulling back from this year’s highs, so it may need a little time before moving higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Eli Lilly is trading between its key averages, which signals neutral price action in the near term.

LLY

Source: Thinkorswim

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