Eli Lilly And Co (NYSE:LLY) stock is down 2.2% to trade at $967.06 at last glance, after a downgrade at HSBC "reduce" from "hold." The analyst cited an "inflated market" for obesity drugs, adding that LLY is appropriately priced.
The brokerage bunch was firmly bullish on Eli Lilly stock coming into today, with 26 of the 30 firms in question sporting "buy" or better ratings, while the 12-month consensus target price of $1,201.43 is a 21.5% premium to current levels. This indicates there's plenty of room for more bear notes.
While the shares have taken a breather from their Jan. 8, record high $1,133.95, a floor at $950 has kept price action in check. LLY now carries a 9.8% year-to-date deficit, but in the last 12 months it has added over 17%.
Options traders lean bearish, per the stock's 10-day put/call volume ratio of 1.16 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 98% of annual readings. Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.60 ranks higher than all other readings from the past year.
Options are affordable, per Eli Lilly stock's Schaeffer's Volatility Index (SVI) of 37% that ranks higher than 25% of all other readings from the past year. In other words, near-term option traders are pricing in relatively low volatility expectations.
