During today's afternoon trading session, Eli Lilly and plummeted to $1075.47 per share. It's still 5.03% above its mean target price of $1024.0, so there may still be room for more downwards movement -- even after today's -2.6% drop. Analysts are giving the Pharmaceutical stock on average rating of buy, with target prices ranging from 770.0 to 1500.0 dollars per share.
The market seems to share this rosy outlook, since Eli Lilly and has a short interest of only 0.9%. This represents the percentage of the share float that is being shorted, and each short position stands for an investor's expectation that the price of the stock will go down in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy 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, 83.1% 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.
Overall, there is mixed market sentiment towards Eli Lilly and because of an analyst consensus of little upside potential, a buy rating, a very low short interest, and a significant number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about LLY:
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It has trailing 12 month earnings per share (EPS) of $20.43 per share
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Eli Lilly and has a trailing 12 month Price to Earnings (P/E) ratio of 52.6 while the S&P 500 average is 29.3
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The company has a Price to Book (P/B) ratio of 40.49 in contrast to the S&P 500's average ratio of 4.74
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Eli Lilly and is a Health Care company, and the sector average P/E and P/B ratios are 22.94 and 3.19 respectively
