Danish drugmaker Novo Nordisk ‘s promising data on its obesity drug Wegovy should benefit Eli Lilly ‘s pipeline and its stock, according to Morgan Stanley. Shares of Novo Nordisk soared 15% in early trading Tuesday after late-stage trial data showed that Wegovy reduced the risk of major cardiovascular events, such as heart attacks or strokes, by 20%, compared with a placebo. “This is above our expectations and our prior analysis,” Morgan Stanley analyst Terence Flynn said. The analyst said Eli Lilly’s stock could rally at least 5% on this news as the positive data could pave the way for more insurance coverage of obesity treatments already in the Indianapolis drugmaker’s pipeline. “We expect LLY shares to trade up > 5%, given this data should continue to build the case for broader insurance coverage of obesity drugs, such as LLY’s Mounjaro, where a separate Ph3 outcomes trial is ongoing,” Flynn said. Flynn has an overweight rating on Eli Lilly and a $560 12-month price target, which would translate into a 23% gain from Monday’s close of $454.08. Eli Lilly raised its full-year guidance Tuesday as second-quarter profit jumped 85% from the same period a year ago on strong sales resulting from its drug pipeline. Shares were already up more than 8% in early trading Tuesday. — CNBC’s Michael Bloom contributed to this report.
