Morgan Stanley upgrades Eli Lilly, seeing growth for diabetes drugs and a strong pipeline

An Eli Lilly & Co. logo is seen on the cap of a pill bottle in this arranged photograph at a pharmacy in Princeton, Illinois.
Daniel Acker | Bloomberg | Getty Images

Eli Lilly is well-positioned for growth in the near and long term, according to Morgan Stanley.

The firm upgraded the pharmaceutical company to outperform from equal weight, saying Eli Lilly has strong prospects in its drug pipeline and its suite of diabetes drugs should see "strong and durable" growth despite rising competition. The stock was rose 3.3% in premarket trading, to $129.48, and has risen 11.9% year to date.

Morgan Stanley also raised its price target on the stock to $150 per share from $116 and said the company had the potential to boost growth with "tuck-in" acquisitions.