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Friedman Billings downgraded Eli Lilly (LLY
) to market perform from outperform.
Analyst David Moskowitz says his downgrade is based on valuation and potential execution risks. He notes Lilly is up 20%+ since early November -- near his $69 12-month target. While he thinks the drug maker has among the best prospects in the U.S. pharmaceutical group, he sees further material risks with respect to Zyprexa, as well as the final approval and launch of Strattera and Cialis.
He's also concerned about earnings per share management and visibility with selling and marketing costs expected to significantly rise in the coming quarters. Furthermore, Moskowitz sees the potential for delays in resolving Lilly's manufacturing compliance issues. In fact, he says a lot has to go well for Lilly on several visible fronts in order to justify its current share price.