The recent pullback in Eli Lilly's stock provides an attractive buying opportunity ahead of the company's Alzheimer's drug launch, Citi said. Citi upgraded Eli Lilly to a buy rating from neutral. The firm also hiked its price target on the stock to $265 from $210. The new projection is 19.5% higher than Eli Lilly's closing price Tuesday. Lilly competitor Biogen received Food and Drug Administration approval for its Alzheimer's treatment, Aduhelm, in June despite sparse data on its efficacy and its average cost of $56,000 a year per patient. The head of the FDA in July called for a federal investigation into the approval of Aduhelm and big clinics announced they won't administer the drug. Biogen generated $2 million in revenue in the first few weeks of its approval, the company said. Shares of Eli Lilly are down 19.7% from August highs. "Valuation rather than fundamentals/execution has always been our challenge with LLY. We believe the recent sell-off post Aduhelm launch gives investors an important entry point into the name," Citi's Andrew Baum said in a note. The approval process and commercial rollout of Eli Lilly's donanemab Alzheimer's treatment will be smoother than Biogen's drug launch, according to Citi "We expect LLY to enjoy a materially superior launch to BIIB's current Aduhelm launch," Baum said. The firm values the potential addressable market for Lilly's drug donanemab at more than $20 billion after adjusting for three near-term entrants. Citi also sees tailwinds across Lilly's medicines treating breast and prostate cancer, and other drugs in its pipeline. "While donanemab garners most near-term investor attention, we think there is upside to consensus expectations across the portfolio," Baum said. —CNBC's Michael Bloom contributed reporting.
Eli Lilly Pharmaceutical company logo
SOPA Images | LightRocket | Getty Images
The recent pullback in Eli Lilly's stock provides an attractive buying opportunity ahead of the company's Alzheimer's drug launch, Citi said.