:max_bytes(150000):strip_icc()/GettyImages-2092473213-6be920f942a74eb2b7881e83c1461435.jpg "Eli Lilly shares close lower after news of bond sale to finance Morphic deal")
Key findings
- Eli Lilly is selling bonds to finance the acquisition of drug developer Morphic. The sale is said to be worth $5 billion.
- Deutsche Bank analysts upgraded the company’s stock following the release of quarterly results last week.
- Lilly’s share price jumped at the beginning of the day but closed lower.
Eli Lilly (LLY) shares closed lower on Monday after rising in a trading session that saw ups and downs on an analyst upgrade before sliding into losses on news of $5 billion in bond sales.
Deutsche Bank analysts called the pharmaceutical company a “high-growth unicorn” and upgraded the stock to “buy.” The rise was partly due to 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, representing a nearly 15 percent premium to Lilly’s closing price on Friday. Shares rose above $904 on Monday morning.
Bonds help finance Morphic acquisition
The stock gave up its initial gains after Bloomberg One report said the company would sell $5 billion in bonds to finance its $3.2 billion acquisition of Morphic (MORF). Lilly confirmed the sale in a regulatory filing but provided fewer details.
The deal, announced last month, adds Morphic’s lead development drug for inflammatory bowel disease to Lilly’s portfolio. The company is also developing molecules to treat autoimmune diseases, pulmonary hypertension, fibrotic diseases and cancer.
Lilly will sell the bonds in five parts, including a 40-year bond with a yield 1 percent higher than a U.S. Treasury bond, the report said. Corporate bonds are generally considered riskier than U.S. Treasuries, so they tend to carry higher interest rates.
A spokesman for Eli Lilly declined to comment. The company’s shares ended Monday’s session down less than 1%.
