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Key Points
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Eli Lilly is selling bonds to finance its acquisition of drug developer Morphic in a sale reportedly worth $5 billion.
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Deutsche Bank analysts have upgraded the company’s shares following last week’s quarterly results.
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Lilly shares rose early in the day but closed in the red.
Eli Lilly (LLY) stocks closed lower on Monday after a back-and-forth session that saw an analyst upgrade send prices higher until news of $5 billion in bond sales sent prices into the red.
Deutsche Bank analysts called the drugmaker a “high growth unicorn” and upgraded the stock to a buy rating. The rise was partly based on sales of weight-loss drug Mounjaro, which more than tripled to $3.09 billion when the company reported earnings last week
The firm raised its price target to $1,025 from $725, a premium of nearly 15% to Lilly’s closing price on Friday. Shares were trading above $904 Monday morning.
Bonds help finance Morphic acquisition
The stock gave back its earlier gains after Bloomberg A report said the company would sell $5 billion worth of bonds to fund its $3.2 billion acquisition of Morphic (TOMORROWLilly confirmed the sale in a regulatory filing, but provided fewer details.
The deal, announced last month, adds Morphic’s flagship development drug for inflammatory bowel disease to Lilly’s portfolio. The company is also developing molecules intended to treat autoimmune diseases, pulmonary hypertensive diseases, fibrotic diseases and cancer.
Lilly will sell bonds in five parts, including a 40-year bond with a 1% higher yield than a U.S. Treasury bond, the report said. Corporate bonds are generally considered riskier than U.S. Treasuries, so they typically have higher interest rates to compensate.
A spokesman for Eli Lilly declined to comment. Shares of the company ended Monday’s session down less than 1%,
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