Zyprexa

Moskowitz also said Lilly's injectable insulin franchise is declining at more than 9 percent per year, and will face pressure from Sanofi-Aventis' recently released Apidra.

Merrill Lynch analyst David Risinger said Lilly's key pipeline products appear high-risk.

He said Lilly's data from late-stage trials of Arxxant _ a drug for the treatment of diabetes-related vision loss _ was not robust and may not get timely clearance from the Food and Drug Administration in 2006.

He also said anti-clotting drug Prasugrel faces a tough challenge, as it needs to show superiority to Sanofi-Aventis' Plavix to hit its primary endpoint in Phase III trials.

In downgrading the stock to "Neutral" from "Buy", Risinger predicted 2006 to 2009 per-share earnings growth of 8 percent versus the Wall Street consensus estimate of 10 percent.

Friedman's Moskowitz, who has a $53 price target on Lilly, praised competitor Wyeth, noting that two new product approvals are expected this year.

He boosted his Wyeth price target to $54 from $51.

Wyeth shares were recently down 22 cents to $48.95 in afternoon trading on the New York Stock Exchange.

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"In our view, slowing growth trends do not support Lilly's premium valuation," Moskowitz went on to say.

The stock's rallied strongly since late last year.

See interactive charting.

Separately, Merrill Lynch's David Risinger downgraded Lilly from buy to neutral, citing difficulties with Cymbalta, the company's antidepressant medication.

"The trigger for our downgrade is that Cymbalta is struggling to gain prescription share despite [the] company's new promotional efforts," Risinger said.

Risinger went on to say that analyst projections for the company's long-term growth likely are too optimistic.

Russ Britt is the Los Angeles bureau chief for MarketWatch.

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