Morgan Stanley Reiterates Buy Rating on Eli Lilly Stock (LLY), Citing New Copay Strategy

Wall Street investment bank Morgan Stanley (MS) has reiterated its Buy-equivalent overweight rating on Eli Lilly (LLY) stock.

Analysts at Morgan Stanley also reaffirmed their price target on LLY stock of $1,133.00. That target is nearly 60% higher than where Eli Lilly shares currently trade. In maintaining its rating and price target on LLY stock, Morgan Stanley highlighted the recent announcement by Cigna/Evernorth that limits patient copays to $200 per month for Lilly’s Zepbound weight loss medication.

The Cigna copay deal is similar to CVS Caremark’s strategy, announced on May 2, that will see the retail pharmacy chain partner with Eli Lilly rival Novo Nordisk (NVO) to prioritize its competing Wegovy weight loss medication on its national formulary starting July 1 of this year.

Copay Strategy

The agreement between Cigna/Evernorth and Eli Lilly aims to encourage employers to opt into weight loss medication coverage for workers while keeping the costs manageable. Morgan Stanley says the deal is well-timed and comes as Eli Lilly demonstrates strong financial performance, with revenue growth of 36.38% and an impressive gross profit margin of 81.7%.

The investment bank also likes that Eli Lilly and Purdue University have expanded their alliance with a $250 million investment, focusing on integrating artificial intelligence (AI) into drug discovery and enhancing workforce development. The analysts signaled out Eli Lilly’s continued investments in innovation as a net positive for the company and its shareholders.

LLY stock is down 7% this year.

Is LLY Stock a Buy?

The stock of Eli Lilly has a consensus Strong Buy recommendation among 19 Wall Street analysts. That rating is based on 17 Buy, one Hold, and one Sell recommendations issued in the last 12 months. The average LLY price target of $989.07 implies 37.51% upside from current levels.

Read more analyst ratings on LLY stock