Eli Lilly shares gain on expanded Zepound access, rated Outperform

Tuesday, Eli Lilly (NYSE:LLY) received continued support from BMO Capital with a reiteration of its Outperform rating and a $1,101.00 price target. The pharmaceutical giant announced the availability of 2.5mg and 5mg single-dose vials of Zepound through its self-pay channels, Lilly Direct.

This move is expected to enhance patient access to the obesity treatment and address issues related to the distribution of compounded drugs.

The company's initiative is seen as a significant step in improving access for patients dealing with obesity. It also strengthens Eli Lilly's manufacturing position, as the firm aims to expand the availability of its medicines. This development follows the company's previous update during its second-quarter earnings call, where it noted early efforts toward supply normalization.

BMO Capital's stance reflects optimism about Eli Lilly's strategy to increase the reach of its treatments. By making Zepound more accessible, Eli Lilly is not only expected to meet patient needs more effectively but also to mitigate the risks associated with unregulated compounded drug distribution.

The company's proactive approach in making Zepound available through direct channels is likely to have a positive impact on its shares. Eli Lilly's commitment to addressing manufacturing and distribution challenges signifies ongoing improvements in its operational capabilities.

In other recent news, Eli Lilly has made several significant developments. The company has received an Overweight rating from Morgan Stanley, with a price target of $1,106. Eli Lilly has also introduced new single-dose vials of its drug Zepbound in the U.S., a move that aligns with previous statements made during their second-quarter earnings call. In addition, the pharmaceutical giant has completed its acquisition of Morphic Holding (NASDAQ:MORF), Inc., adding therapy for inflammatory bowel disease to its portfolio.

Eli Lilly's Alzheimer's drug, donanemab, is expected to face rejection by the United Kingdom's National Health Service. However, the company's tirzepatide has shown promising results in a phase 3 study, significantly reducing the risk of progression to type 2 diabetes. Furthermore, the Biden administration has selected Jardiance by Eli Lilly for price negotiations with the Medicare health program, a move that could save the U.S. government $6 billion in the first year from newly negotiated lower prices.

Analysts from Evercore ISI have maintained an In Line rating on Eli Lilly's shares, following the company's announcement of new vial forms for its medications Mounjaro and Zepbound. The company has also announced the availability of Zepbound single-dose vials, offering a more affordable self-pay option for individuals with obesity.

InvestingPro Insights

As Eli Lilly (NYSE:LLY) continues to expand its reach and improve patient access to its obesity treatment Zepound, real-time data from InvestingPro offers insights into the company's financial health and market position. With a robust market capitalization of $855.88 billion, Eli Lilly showcases its significant presence in the pharmaceutical industry. This is further underscored by a substantial revenue growth of 31.87% over the last twelve months as of Q2 2024, reflecting the company's ability to generate increased sales from its products.

InvestingPro Tips highlight Eli Lilly's commitment to returning value to shareholders, as evidenced by its consistent dividend growth, having raised its dividend for 9 consecutive years. Additionally, the company's net income is expected to grow this year, which could be a positive indicator for future financial performance. For investors looking to delve deeper into Eli Lilly's prospects, InvestingPro offers 17 additional tips, including analyst earnings revisions and valuation multiples, providing a comprehensive view of the company's financial landscape.

While Eli Lilly trades at a high earnings multiple, with a P/E ratio of 116.76, this reflects investor confidence in the company's future earnings potential. The company's operational strength is also evident in its high gross profit margin of over 80%, showcasing efficient management and a strong competitive edge in the pharmaceuticals sector. Eli Lilly's strategic initiatives, such as making Zepound more accessible, are likely to contribute to its continued success and shareholder value.

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