Deutsche Bank analysts on Monday raised Eli Lilly (NYSE:) shares from “Hold” to “Buy” and raised their price target from $725 to $1,025, suggesting upside potential of 15% from current levels.

Eli Lilly shares rose 1.6% in pre-market trading.

The developments come after the drugmaker recently released a robust Q2 2024 earnings report, which analysts said “helped calm nerves amid an unstable macroeconomic environment.”

“We believe LLY stock will outperform given its high growth prospects and low beta,” they added.

A key factor in this decision was the unexpected growth in Mounjaro sales outside the U.S., which created a significant recent revenue base.

Both Mounjaro and Zepbound exceeded expectations in the U.S. market during the same quarter, demonstrating dual strength that defied previous assumptions that the company would need to prioritize one product over the other.

In addition, Deutsche Bank analysts highlighted LLY’s increased production capacity for tirzepatide, the busy substance in the drugs Mounjaro and Zepbound.

“IQVIA pen data suggest that LLY has exceeded ≥1.5x saleable doses for Tirzep as early as April 2024,” the analysts noted.

“We do not expect Tirzep to be readily available on pharmacy shelves, but the gradual introduction of Zepbound vials to the U.S. market helps LLY achieve real-time demand in the second half of 2024 and into 2025,” they added.

While competition from companies like Novo Nordisk (NYSE:) and Roche is growing, Deutsche Bank believes it will be many years before these rivals become a stern threat.

Analysts believe Roche’s non-peptide oral GLP1, CT996, poses the biggest commercial threat to Eli Lilly. However, while EASD (European Association for the Study of Diabetes) data on CT996 is robust, it is unlikely to reach the market before the early 2030s.

Analysts say this “gives LLY shares plenty of time to ‘work themselves out’ and build on their above-average growth profile in the near term,” as they continue to expand their portfolio.

Analysts stressed that there is no alternative in the pharmaceutical sector that could demonstrate low double-digit annual revenue growth rate (CAGR) through the 2030s.