Wells Fargo named Eli Lilly & Co. (NYSE:LLY) as its new top pick among large-cap pharmaceutical stocks in a note to clients Tuesday, highlighting the company's potential for significant upside.
In a recent update to its large-cap rankings, Wells Fargo analysts stressed the strength of Eli Lilly's pipeline and its ability to exceed market expectations in the coming years.
The analysts noted that Eli Lilly is well-positioned for growth, particularly with its improving supply chain and increasing international sales.
They anticipate the company to exceed 2025 consensus estimates, driven by upcoming key events such as the Surpass-CVOT trial in 2025, and pivotal results for Orforglipron and Retatrutide in 2025 and 2026.
Furthermore, Wells Fargo is confident in Eli Lilly's long-term prospects, stating that "manufacturing and a wealth of data are going to create a big moat for LLY in the longer term."
Eli Lilly's new ranking pushes Vertex Pharmaceuticals (VRTX) to second place, while AbbVie (ABBV) moves to third.
Despite the shift, Wells Fargo views AbbVie positively, particularly in light of its robust pipeline and the upcoming Emraclidine readout in late 2024.
However, they noted that the risk/reward profile for AbbVie is less attractive at current levels.
In their updated rankings, Wells Fargo placed Gilead (GILD), Amgen (AMGN), and Merck (MRK) in the middle tier, with Gilead leading among the Equal Weight names.
Meanwhile, Bristol-Myers Squibb (BMY) saw a slight upgrade, moving from the bottom to eighth place due to improving outlooks.
Wells Fargo's latest update underscores their strong confidence in Eli Lilly as a top choice for investors seeking exposure in the large-cap pharma sector.