We have noted Eli Lilly and's positive performance during today's morning trading session, during which it logged a 1.0% outperformance of the S&P 500. At its current price of $960.02, the company is now trading in range of its average target price of $1000.89, which calls into question its ability to keep moving higher. Analysts have given the Pharmaceutical stock target prices ranging from $640.0 to $1150.0 dollars per share, with an average rating of buy.
The market seems to share this optimistic view, since Eli Lilly and has a short interest of only 0.8% (this is the percentage of the share float that is being shorted). Each short position represents an investor's expectation that the price of the stock will decrease in the future.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
Another way to gauge the sentiment on Eli Lilly and is to look at the percentage of institutions that are invested in the stock. In this case, 83.5% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
In conclusion, we see mixed market sentiment regarding Eli Lilly and because of an analyst consensus of some upside potential, a buy rating, a very low short interest, and a significant number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about LLY:
-
The stock has trailing 12 month earnings per share (EPS) of $8.16
-
Eli Lilly and has a trailing 12 month Price to Earnings (P/E) ratio of 117.6 compared to the S&P 500 average of 28.21
-
The company has a Price to Book (P/B) ratio of 63.74 in contrast to the S&P 500's average ratio of 4.71
-
Eli Lilly and is a Health Care company, and the sector average P/E and P/B ratios are 27.61 and 3.69 respectively
