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Bank of America Bullish on Eli Lilly and Nike: Analyst Upgrades & Growth Potential

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  Published in Stocks and Investing on Sunday, December 28th 2025 at 8:33 GMT by CNBC

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Eli Lilly’s Continued Ascent & Nike’s Potential: Analyst Optimism Drives Investment Wishlist

A recent analysis by Bank of America Securities paints a bullish picture for both pharmaceutical giant Eli Lilly (LLY) and athletic apparel leader Nike (NKE), suggesting significant upside potential for investors despite current market valuations. The report, released on December 18, 2023, argues that Lilly’s growth trajectory remains strong and that Nike is poised to capitalize on evolving consumer trends, albeit with some specific areas needing attention. The analysts, led by Geoffreigh Johnson, are recommending upgrades for both companies and outlining a "wishlist" of improvements they'd like to see to unlock even greater value.

Eli Lilly: A Long-Term Growth Story Still in Play

The core of Bank of America’s optimism surrounding Eli Lilly revolves around the continued success and expansion of its blockbuster drugs, particularly those targeting diabetes and obesity. Lilly's Mounjaro (for type 2 diabetes) and Zepbound (for weight management) are driving significant revenue growth and are expected to remain key drivers for years to come. The analysts acknowledge that Lilly’s stock has already seen substantial gains – it's been one of the top-performing stocks in the S&P 500 over the past year - but believe the company is still undervalued considering its long-term potential.

The report emphasizes several key factors supporting this view. Firstly, the obesity market itself represents a massive untapped opportunity. Obesity affects a significant portion of the global population, and existing treatments have largely been ineffective or poorly tolerated. Zepbound offers a potentially game-changing solution, with demonstrably strong results in clinical trials [linked to information on Zepbound’s efficacy]. While competition is emerging (Novo Nordisk's Wegovy being a primary example), Lilly is proactively expanding production capacity and exploring new formulations to maintain its market share. The analysts specifically noted that Lilly's ability to scale up manufacturing efficiently will be crucial to meeting anticipated demand.

Secondly, the ongoing research and development pipeline at Eli Lilly is robust. The company isn’t solely reliant on Mounjaro and Zepbound; it has a diverse portfolio of potential future therapies in areas like Alzheimer’s disease and immunology. While success in these areas is not guaranteed (Alzheimer's drug development has historically been fraught with challenges), the sheer volume of research suggests that at least some breakthroughs are likely, further bolstering long-term growth prospects. The analysts highlighted Lilly's commitment to R&D spending as a crucial indicator of its dedication to innovation.

Finally, the report addresses concerns about potential pricing pressures and regulatory scrutiny surrounding these high-demand medications. While acknowledging these risks, the analysts believe that Lilly’s strong intellectual property protection and established relationships with payers (insurance companies) will help mitigate negative impacts. They also suggest that any price controls implemented would likely be gradual and manageable within the context of overall healthcare spending.

Nike: Reimagining Growth in a Changing Landscape

While acknowledging Nike's challenges – including slowing growth in China, increased competition from direct-to-consumer brands like Adidas and emerging players, and inventory management issues – Bank of America remains optimistic about the company’s long-term prospects. The analysts believe that Nike can revitalize its growth by focusing on several key areas, forming their "wishlist" for improvements.

The core of their optimism lies in Nike's brand strength and innovation capabilities. Despite recent headwinds, Nike remains one of the most recognizable and desirable brands globally. The analysts point to Nike’s continued investment in product innovation – particularly in areas like running shoes and apparel – as a key driver of future growth. They specifically mentioned the potential for advancements in sustainable materials and personalized products to attract environmentally conscious and tech-savvy consumers.

However, the report identifies several areas where Nike needs to improve. Firstly, they call for a more aggressive approach to direct-to-consumer (DTC) sales. While Nike has made significant strides in this area, the analysts believe there’s still room for improvement in online experience and personalized marketing. They suggest focusing on enhancing mobile apps and leveraging data analytics to better understand consumer preferences [linked to information about Nike's digital transformation efforts].

Secondly, they want to see a more focused approach to inventory management. Nike has struggled with excess inventory in recent years, leading to markdowns and reduced margins. The analysts recommend streamlining the supply chain and improving demand forecasting to avoid future overstocking situations.

Finally, the report emphasizes the importance of regaining market share in China. While acknowledging the economic slowdown and increased competition in the region, they believe that Nike can win back Chinese consumers by tailoring its products and marketing campaigns to local preferences. This includes leveraging digital platforms popular in China and partnering with influential local figures [linked to information on Nike's strategies for the Chinese market].

Overall Outlook & Investment Implications

Bank of America’s upgrade recommendations suggest a positive outlook for both companies. For Eli Lilly, the analysts see continued revenue growth driven by its blockbuster drugs and pipeline innovations, justifying a higher valuation despite recent gains. For Nike, they believe that targeted improvements in DTC sales, inventory management, and market share recovery can unlock significant value.

The report serves as a reminder that even well-established companies face challenges but also possess the potential for continued growth and innovation. Investors considering these stocks should carefully evaluate the risks outlined – particularly regulatory hurdles for Eli Lilly and competitive pressures for Nike – but also recognize the compelling long-term opportunities presented by both businesses. The analysts’ "wishlist" provides a valuable framework for understanding the key areas where these companies can focus to maximize their potential and deliver enhanced returns for shareholders.

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