Markets & Finance

Bank of America Downgrades Eli Lilly


Eli Lilly (LLY) shares skidded Wednesday after the pharmaceuticals maker posted disappointing third-quarter results and lowered its guidance. Bank of America downgraded the stock to market perform from buy on the news.

Analyst Leonard Yaffe says the key growth drivers, the GAZE (Gemzar, Actos, Zyprexa and Evista) drugs, are slowing more than anticipated due to increased competition. Importantly, the company noted on the conference call that it expects Zyprexa to post flat sales growth in the fourth quarter. In addition, regarding pipeline drugs, he says the company was unable to give an update as to the timing of its restructuring of manufacturing issues.

Further, yesterday Pfizer (PFE) announced a lawsuit against LLY's important pipeline drug, Cialis. Therefore, Yaffe downgraded LLY shares due to continuing uncertainties. He says his earnings model is under review.


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