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Learn moreOn September 15, Berenberg upgraded its rating on Eli Lilly and Company (NYSE:LLY) from Hold to Buy and lifted its price target from $1,220 to $1,400.
The research firm pointed to the company's strong returns on investment and its growth in the obesity treatment market. Berenberg said its 2026 return on research investment analysis confirms the company's track record of delivering best-in-class returns. The firm sees potential for about 25% upside for the stock and expects the company to exceed its fiscal 2026 guidance.
Eli Lilly and Company's (NYSE:LLY) Zepbound and Mounjaro have established market-leading positions in obesity and diabetes treatment. Berenberg expects the anticipated diabetes approval for Foundayo, an oral GLP-1 drug, to unlock significant additional demand. The Medicare Bridge program is also helping drive demand for the company's obesity medicines.
Meanwhile, the company has committed about $60 billion across more than 25 business development deals so far this year, and has capacity for additional spending.
Berenberg believes the value of Eli Lilly and Company's (NYSE:LLY) external pipeline investments is still underestimated. The firm pointed out that many of the new pipeline assets have multibillion-dollar sales potential, while also helping the company diversify its business.
Despite the positive outlook, several risks could affect Eli Lilly and Company's (NYSE:LLY) future performance. The possibility of significant US drug pricing reforms and efforts to bring drug prices closer between the US and Europe could reduce the company's pricing power in the future.
The GLP-1 market also may not expand as quickly as expected, while stronger competition, greater-than-expected price erosion, or clinical setbacks could weigh on the company's growth. Eli Lilly and Company's (NYSE:LLY) Q2 2026 results already showed some pressure on pricing. The company reported that its US realized price declined 3% year-over-year, driven primarily by Zepbound and Mounjaro. Excluding adjustments to estimates for rebates and discounts, US price would have declined by approximately 9%.
Berenberg noted that Foundayo has had a slow initial US launch. However, the drug remains under regulatory review in more than 40 additional countries, and the company expects more approvals later this year.
What the Numbers Say
Hedge fund interest in the stock has also improved. According to Insider Monkey's database, 152 hedge funds held positions in Eli Lilly and Company (NYSE:LLY) in the second quarter of 2026, up from 132 in the first quarter.
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