Replies to post #176383 on Biotech Values

[Rocky3]

LLY? Is that a typo?

No. The quote was taken from a report comparing MRK to LLY. The report starts as follows:

Sell LLY, prefer MRK as key pipeline catalysts approach
Both stocks have outperformed YTD, yet MRK preferred over LLY
LLY (+15%) and MRK (+13%) have both notably outperformed Pharma
(S&P500 Pharma index +7%) and the broader market (S&P500 +2%) YTD
compared to last year when both names underperformed. Consistent with
our “blurred lines” thesis of Pharma and Biotech convergence, we view
this outperformance as mostly pipeline related since MRK initiated an NDA
filing for MK-3475 (PD-1) and LLY top-lined positive ramucirumab phase 3
results in lung cancer and dula comparative study vs. Victoza. Looking
ahead, we see major pipeline catalysts skewed in favor of MRK vs. LLY.
MRK data readouts may drive NT attainment of our price target
We look forward to MRK presentations on April 6 at AACR where we expect
to see updated PD-1 data in melanoma and lung. The following weekend, we
anticipate new Hep C data in difficult to treat patients at EASL for MRK’s next
gen all oral program, and an analyst meeting May 6. Finally ASCO could
also be a key meeting for MRK. These data readouts could lead to higher
estimates and the near term achievement of our $60, 12-month price target.
LLY expected at AACR, ASCO, ADA but biggest news already out
LLY will present phase 1 CDK4/6 data at AACR and phase 3 data for both
RAM and NEC at ASCO. However, the key medical meeting for LLY in 2014
will be ADA where we look forward to detailed dula phase 3 data, which is
already top-lined and not likely to add incrementally, in our view.
MRK Consumer & Animal Health capital allocation edge over LLY
In addition to pipeline catalysts, MRK is facing potentially important capital
allocation updates in 2014 as it contemplates strategic options for these
two business units. While LLY also has optionality in its Animal Health
business, management has indicated they intend to hold on to it.
Reiterating our relative Sell-rating for LLY, Neutral on MRK
We maintain our Attractive view of the sector as we expect likely positive
pipeline results at several important medical meetings this year. Our top
pharma picks remain BMY, ABBV and PFE. LLY looks relatively unattractive
but we see near-term upside to MRK. What is keeping us Neutral is MRK's
relatively subdued mid single-digit 5-year CAGR against an already high
P/E but we acknowledge there exists room for upside.