LLY: Government Access Deals Will Drive Durable Obesity And Diabetes Leadership

Analysts have raised their fair value estimate for Eli Lilly shares from approximately $1,170 to about $1,430 per share, reflecting higher expected profitability and sustained leadership in the GLP 1 obesity and diabetes market, supported by recent U.S. government access deals and upcoming launches such as orforglipron.

Analyst Commentary

Bullish analysts continue to frame Eli Lilly as a core beneficiary of the expanding obesity and diabetes treatment market, with valuation upside tied to both higher GLP 1 penetration and a broadening metabolic pipeline. Recent price target increases cluster well above the $1,100 level, signaling growing confidence that earnings power is still being underestimated as reimbursement and access tailwinds build.

The latest round of research emphasizes that the recent U.S. government pricing and access arrangements, including the Trump GLP 1 deal and expected TrumpRx launch, are viewed more as volume and durability catalysts than as margin headwinds. Several notes highlight that, even at lower unit prices, the combination of Medicare and Medicaid coverage plus direct to consumer channels could materially expand the addressable patient pool and support multi year revenue compounding.

Launch timing and competitive positioning for orforglipron and other next wave assets, including oral GLP 1s, are also central to the positive narrative. Bullish analysts argue that Lilly is poised to maintain category leadership as the treatment landscape shifts to more convenient formulations, with ex U.S. expansion and additional indications adding incremental legs to the growth story.

Bullish Takeaways

• Multiple bullish analysts have raised price targets into the $1,180 to $1,500 range, reflecting increased confidence in Lilly's ability to convert its GLP 1 franchise into durable earnings growth and justify a premium multiple.
• Positive commentary around the Trump GLP 1 pricing and access framework views the tradeoff as favorable, with expanded Medicare and Medicaid coverage expected to accelerate volume growth and support higher long term free cash flow.
• Forecasts are being revised higher on the back of strong recent revenue and EPS beats, with upward estimate revisions through 2026 reinforcing the view that consensus still underappreciates the earnings trajectory.
• Execution on the obesity and diabetes strategy, including the anticipated orforglipron launch and ex U.S. rollout, is seen as consolidating Lilly's leadership position and underpinning continued market share gains in high value metabolic segments.

What's in the News

• The U.S. government negotiated a 71% discount on Novo Nordisk's GLP 1 drugs Ozempic and Wegovy for Medicare patients, intensifying GLP 1 pricing pressure and potentially reshaping economics for Eli Lilly's competing obesity and diabetes franchise (Bloomberg).
• Novo Nordisk launched introductory U.S. cash pay pricing of $199 per month for Wegovy and Ozempic starter doses, directly matching or undercutting Eli Lilly's Zepbound pricing and raising competitive stakes in the obesity market (Bloomberg).
• The Trump administration is finalizing TrumpRx deals with Eli Lilly and Novo Nordisk that would allow low dose weight loss drugs to be sold for $149 per month and bring Medicare and Medicaid coverage into the class, a key volume catalyst for GLP 1 therapies (Wall Street Journal, Endpoints, CBS).
• Eli Lilly reached an agreement with the U.S. government to expand access to its obesity medicines and lower out of pocket costs for Americans on government insurance plans, reinforcing the policy and reimbursement tailwind behind its GLP 1 portfolio (company announcement).
• A landmark civil RICO class action over Actos bladder cancer risks, targeting Takeda and Eli Lilly, was upheld on appeal, increasing potential legal and financial exposure while spotlighting regulatory scrutiny of legacy diabetes products (Wisner Baum LLP).

Valuation Changes

• Fair value estimate has risen significantly, from approximately $1,170 to about $1,430 per share, reflecting higher expected long term profitability.
• Discount rate has increased slightly, from about 6.78% to roughly 6.96%, implying a modestly higher required return and risk assumption.
• Revenue growth has edged down slightly, from around 24.3% to about 23.8%, suggesting a marginally more conservative top line outlook.
• Net profit margin has risen meaningfully, from roughly 39.1% to about 42.7%, indicating stronger expected operating leverage and earnings quality.
• Future P/E has increased slightly, from about 31.8x to roughly 32.2x, signaling a modestly higher valuation multiple on forward earnings.