Eli Lilly & Co. Shows Strong Growth and Investor Confidence, Poised for Bullish Upward Trend

Fundamental Analysis

Eli Lilly and Company (LLY) is a major player in the large cap pharmaceuticals sector. With a market capitalization of $546.47 billion and exceptional results reported from its fundamental operations, the company has demonstrated robust growth and profitability.

The company's earnings per share (EPS) stands at 7.19, and it has a Price to Earnings ratio (PE) of 80.06, indicative of high investor confidence and parallel market valuation. A large number of outstanding shares, 949.29 million, adds to the company's liquidity.

Reports suggest a strong market performance for Eli Lilly, partly due to the success of Wegovy, a weight loss drug by Novo Nordisk. The success of Wegovy might potentially benefit Eli Lilly's incretin drugs, tirzepatide and retatrutide, making them reliable contenders for obesity treatment.

The spotlight on pharmaceuticals and biotech stocks, owing to recent successful breakthroughs, adds to the attractive prospects of Eli Lilly. As very recent news points out, the company's diabetes drug Mounjaro significantly contributed to revenue growth, pushing the shares price up by 22% in the month of August.

From an earnings perspective, the company's most recent announcement is due on November 2, 2023. While the earnings report could influence the stock's price, it's worth noting that the majority of analysts have a "buy" consensus for this stock, with 14 recommending a buy and none recommending a sell or hold.

Technical Analysis

The technical data provides additional insights into the stock's trend and price movements.

The last closing price on September 15, 2023, was $575.66, with a change of -15.95 (-2.70%). Whilst the stock experienced a slight decline, it remains above the 50-day moving average at $508.21 and the 200-day moving average at $410.14, suggesting a positive trend despite temporary negative volatility.

The stock's 14 day Relative Strength Index (RSI14) is 64, implying that the stock is nearing overbought conditions, and investors should watch out for potential price corrections. The Moving Average Convergence Divergence (MACD) currently stands at 20.43, further indicating strong bullish momentum.

In terms of price ranges, the 52-week range for LLY spans between a low of $296.32 and a high of $601.84. The recent high is promising, with the potential of revisiting this level if the bullish trend persists.

On the downside, the immediate support stands at $526.23, and resistance is located at $586.46. A stop-loss level has been set up at $552.28 to reduce the potential loss should the stock price decrease.

Future Outlook & Recommendation

Taking the Discounted Cash Flow (DCF) analysis into consideration at $577.94, it reveals a slight undervaluation as compared to the last close. This, combined with strong fundamental and technical indicators, positions LLY as a sound investment option.

As for the immediate future, given the current technical scenario and assuming no significant news that could interrupt the current trend, the stock's price might hover near the current level or slightly higher on the next trading day, which is September 18, 2023.

However, in the upcoming week, the stock price is expected to trend upwards, possibly near or beyond the resistance level, given the prevailing bullish momentum.

Considering all these factors, the overall perspective leans towards a "Buy" for Eli Lilly stock. The solid fundamental outlook, the prospects of tirzepatide and retatrutide, and the technical indicators subtending bullish sentiments, all justify this recommendation.