The stock of Eli Lilly (LLY) was up in early trading on Aug. 4 amid media reports that Medicare in the U.S. may soon cover its weight-loss medications.
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Medicare coverage would make Eli Lilly’s Zepbound weight-loss drug more affordable for consumers, potentially expanding its share of the lucrative market. Bernstein reiterated a Buy-equivalent outperform rating on LLY stock with a $1,100.00 price target, citing the Center for Medicare and Medicaid’s planned demonstration project that experiments with covering weight-loss drugs through Medicare and Medicaid.
The investigation by the Center for Medicare and Medicaid represents a big step toward removing the current exclusions of weight-loss medications from government-sponsored healthcare programs, which cover approximately 36% of the American population. Eli Lilly, and many patient advocacy groups, have been lobbying for Medicare coverage of Zepbound.
A one-month supply of Zepbound can cost more than $1,000 with no insurance coverage.
Weight-Loss Pill
At the same time, Bernstein says that the potential launch of a new weight-loss pill provides Eli Lilly with an ideal opportunity to collaborate with the U.S. government to expand access to its weight-loss drugs for patients over the age of 65. Medicare coverage would also lead to greater flexibility on pricing and distribution, according to Bernstein.
In the end, Bernstein says that Eli Lilly is “in the strongest position to capitalize” on potential Medicare coverage of weight-loss drugs, which also includes the company’s popular diabetes drug Mounjaro. Additionally, Eli Lilly is making advances with its treatments for Alzheimer’s disease, which is another reason investors should be bullish on LLY stock, notes Bernstein.
Is LLY Stock a Buy?
The stock of Eli Lilly has a consensus Strong Buy rating among 19 Wall Street analysts. That rating is based on 17 Buy and two Hold recommendations issued in the last 12 months. The average LLY price target of $1,028.80 implies 35.22% upside from current levels.
