UBS Reiterates Buy Rating on Eli Lilly Stock (LLY) and Lauds Pricing Strategy

Analysts at Swiss bank UBS (UBS) have reiterated a Buy rating and $1,050.00 price target on Eli Lilly (LLY) stock, praising the pharmaceutical company’s pricing strategy.

In maintaining its Buy rating, UBS singled out the launch of Eli Lilly’s single-use Zepbound weight loss drug vials and pricing strategy. The single vials, sold exclusively through the online LillyDirect portal, are priced at $349 monthly for the 2.5mg starter dose and $499 monthly for 5mg, 7.5mg and 10mg doses.

UBS noted that patients can potentially split a single 10mg vial into four 2.5mg doses, creating an effective price of $125 monthly for the medication from the initial $499 cost. The team of analysts said this pricing strategy aligns with Lilly’s business model that generates an 81.7% gross profit margin.

Delayed Refills

In a note to clients, UBS said that Eli Lilly appears to be aware of the vial splitting trend, implementing a tiered pricing structure that increases costs for delayed refills. If patients wait longer than 45 days between refills, the price rises to $599 for 7.5mg and $699 for 10mg doses of the weight loss drug.

At the $699 price point for a 10mg dose, the effective monthly cost becomes $175 for patients splitting into four 2.5mg doses or $350 for those creating two 5mg doses. UBS noted that these effective prices align with cheaper compounding pharmacy rates, which typically range between $150 to $350 monthly.

LLY stock has risen 6% this year.

Is LLY Stock a Buy?

The stock of Eli Lilly has a consensus Strong Buy recommendation among 20 Wall Street analysts. That rating is based on 17 Buy, two Hold, and one Sell recommendations issued in the last 12 months. The average LLY price target of $997.60 implies 22.94% upside from current levels.

Read more analyst ratings on LLY stock