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Investing.com - BMO Capital raised its price target on Eli Lilly (NYSE:LLY) to $930.00 from $840.00 on Monday, maintaining an Outperform rating on the pharmaceutical giant ahead of its third-quarter earnings report. The company, currently valued at over $720 billion, has demonstrated strong financial health with an "GREAT" rating according to InvestingPro metrics.
The upgrade comes as BMO notes continued strong volume-based growth for Lilly’s incretin medications, with prescription data showing Mounjaro and Zepbound performing well against competitor Novo Nordisk’s offerings. Scripts for these medications have increased 65% and 193% year-over-year, respectively. This growth aligns with Lilly’s impressive 37% year-over-year revenue growth and robust 83% gross profit margin.
BMO expects Zepbound’s underlying price in the third quarter likely eroded by low to mid-single digits, following Lilly’s new pharmacy benefit manager agreements that began July 1. The firm attributes this pricing pressure partly to a higher proportion of patients using cash-pay vials compared to previous quarters.
The research firm also noted that starter doses of Zepbound at 2.5mg could weigh down the overall average net price for the medication during the quarter, though higher doses are expected to maintain similar net prices.
Despite these pricing dynamics, BMO projects Zepbound revenues to reach $3.52 billion for the quarter, slightly above the consensus estimate of $3.51 billion, as strong volume growth is expected to offset pricing pressures. With analyst targets ranging from $650 to $1,190 and a strong consensus recommendation of 1.79, InvestingPro subscribers can access detailed valuation analysis and 14 additional key insights about Eli Lilly’s future prospects.
In other recent news, Eli Lilly and Company announced that its breast cancer drug Verzenio has shown a significant survival benefit in high-risk early breast cancer patients. The Phase 3 monarchE trial revealed that Verzenio, when combined with endocrine therapy, reduced the risk of death by 15.8% compared to endocrine therapy alone, with a seven-year overall survival rate of 86.8%. Additionally, Eli Lilly’s experimental oral GLP-1 receptor agonist, orforglipron, demonstrated superior blood sugar control in two Phase 3 diabetes trials, outperforming existing treatments. Despite this progress, orforglipron was not included in the initial list of drugs selected for Commissioner’s National Priority Vouchers, although Cantor Fitzgerald has maintained an Overweight rating for Eli Lilly with a price target of $925.00. In response to Eli Lilly’s strong first-half performance, Erste Group has upgraded the company’s stock rating from Hold to Buy. Furthermore, Eli Lilly plans to present the primary overall survival analysis from its monarchE study of Verzenio at the European Society for Medical Oncology Annual Meeting. These developments highlight Eli Lilly’s ongoing efforts in advancing treatment options across various medical fields.
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