Jefferies is out with a few Big Pharma downgrades.
Eli Lilly (LLY) is downgraded to Underperform from Hold on "further R&D disappointment in its pipeline as well as the increased strain this will put on future cash flow allocation required to maintain the dividend." Price target cut to $40 from $49.
Merck (MRK) is cut to Hold from Buy as Jefferies says the magnitude of share repurchases and cost-savings was "less than hoped for." Although MRK may "divest or JV either (or both) its Consumer or Animal Health units, this alone is not reason enough ... to leave the shares on a Buy rating ... considering the pressures on Januvia growth [and] poor R&D productivity."