• Analysts at UBS said Eli Lilly is their top Big Pharma stock pick.
• They said Lilly's obesity and diabetes drug Mounjaro will likely top Wall Street's sales estimates.
• The experimental Alzheimer's drug lecanemab could help boost the stock too.

Analysts at UBS said investors should bet on the Big Pharma company Eli Lilly, because of strong prospects for its weight loss and diabetes drug Mounjaro, and because its experimental Alzheimer's treatment "could be icing on the cake."

The analysts upgraded the stock to buy from neutral, and said it can reach $363.00 in the next 12 months, in a note dated Thursday. Lilly's stock gained 3.2% to $305.80 on Thursday morning. Eli Lilly CEO Dave Ricks Eli Lilly

UBS analysts led by Colin Bristow said the main reason they upgraded the stock is that they expect sales of Mounjaro, also known as tirzepatide, to surpass Wall Street's expectation, reaching a peak of $25 billion. They said they expect the drug to be approved to treat obesity, thanks to a trial that showed that some patients had a weight reduction of more than 20% on the drug. They also touted the potential of Lilly's experimental Alzheimer's drug donanemab, saying it has a 60% chance of success.

The analysts wrote that "Mounjaro could be the biggest drug ever." 

"We now view LLY as being the most attractive name in our large cap coverage, with the greatest potential upside to numbers," they wrote.

Mounjaro is not currently approved for weight loss by the US Food and Drug Administration, though doctors can prescribe it off-label for that use. Clinical trial results showing it helps patients lose significant weight mean the FDA will probably approve it for that purpose around the middle of next year, the UBS analysts said. Mounjaro works by reducing appetite, as Insider's Gabby Landsverk has reported. Wegovy, a diabetes medication that works in a similar way, was approved to treat obesity in 2021.

The analysts said that clinical trial results on other Alzheimer's drugs, such as Biogen's lecanemab, could provide clues as to whether Lilly's donanemab is likely to work. If those other drugs produce good results, it could help boost Lilly's stock further, because Lilly's drug works in a similar fashion, aiming to reduce the amount of beta-amyloid proteins in the brain to treat Alzheimer's.