August 1, 1999. Eli Lilly's one year income growth has been 17%, with sales of $9,224.2 million
and income of $2,287.6 million. The net profit margin has been 24.8% with the industry average at 16.3%.
Investor's believe that the stock is either undervalued or overvalued compared to other stocks
in its industrial group. With a multiple of 33.10, the stock should be priced at $85.00 a share by the end of 1999.
A more realistic figure by the end of year 2000 should be about $100.00 a share. As of last Friday's close, the
stock was at $65 11/16 per share.
Eli Lilly is my top pick of the drug sector based on my expectation that the consistent high
teen revenue and EPS growth will lead to robust growth earnings and multiple expansion.
The shares have lagged under pressure due to concerns about Prozac competition. However, Lilly's
excellent CNS, diabetes, cancer drugs, and drugs in the pipelines should easily offset any such major concerns.
Excellent volume growth, direct to consumer advertising, and low managed care co-payments combined with modest
growth, form solid industry fundamentals well beyond 2000!
Eli Lilly makes Prozac, the world's best selling antidepressant. It also makes Gemzar (for pancreatic
cancer), Humalog (injectable insulin) ReoPro (anti-clotting compound used on angioplasties), Evista (osteoporosis)
and Zyprexa (schizophrenia treatment being tested for use in bipolar disorders and Alzheimer's). Other products
include antibiotics, growth hormones, anti-ulcer agents, therapy medications, sedatives, vitamins, and feed for
animal health products. Ticker symbol: LLY
George
