Hopes are sky-high for Eli Lilly’s recently launched weight reduction drug Zepbound. Investors shall be tuning into the corporate’s fourth quarter earnings call on Feb. 6, eager to hear more about how that rollout is going. One key statistic shall be the number of economic health insurers providing coverage of the drug, which was approved by the Food and Drug Administration on Nov. 8. Lilly also is expected to reveal its outlook for 2024 for the primary time. Zepbound, a once-a-week injection, has only been available in pharmacies since early December, but the typical analyst expects that the drug’s sales reached $75 million within the fourth quarter, according to StreetAccount. More importantly, by the tip of 2024, analysts expect sales to ramp up to $3.79 billion, then greater than double to $7.83 billion by 2025. Those estimates have been creeping higher heading into Eli Lilly’s report, and analysts see the potential for further upside when Lilly provides its outlook. ‘Off to a strong start’ “While we acknowledge that the launch is off to a strong start, with Zepbound achieving greater TRx [total prescription] volume than Mounjaro on a launch-adjusted basis, we are relatively conservative in our 4Q estimate based on the timing of the launch (late in 4Q) and what we expect shall be relatively high gross-to-net discounts (within the ~80% range),” wrote Goldman Sachs analyst Chris Shibutani in research note on Sunday. Goldman Sachs said the info from market researcher IQVIA suggests that Zepbound is capturing market share from Novo Nordisk’s anti-obesity drug Wegovy, but all the category has been growing. “We view payor access and provide as key debates within the early launch — where access is gated not only by formulary adoption, but also employer opt-ins; and provide continues to be tight across LLY’s portfolio of incretin products,” Shibutani said. Lilly’s Mounjaro and Zepbound each use tirzepatide as an lively ingredient, but Mounjaro is indicated for type 2 diabetes, while Zepbound aids weight reduction. Tirzepatide mimics two incretin hormones within the body, GLP-1 and GIP, to regulate insulin and control hunger. Trulicity, one other diabetes treatment sold by Lilly, also is considered an incretin. Drugs like Wegovy and Zepbound have been hailed for his or her ability to help patients shed more kilos than earlier sorts of weight reduction medications, with Zepbound’s average success even topping Wegovy’s in clinical trials. Still, patients searching for these drugs can face significant hurdles. For instance, patients covered by Medicare cannot get coverage for these drugs due to federal regulations. Nonetheless, not less than 16 states have expanded access to some anti-obesity medications, according to Bank of America. Some industrial insurance policy require prior authorizations or have limitations on the usage of these drugs. Paying out of pocket is not an option for a lot of patients because the drugs each have list prices that top $1,000 for a month’s supply. According to Bank of America, greater than 80% of economic insurance policy have put Wegovy on the formulary (the list of covered drugs) and about half of employers have opted into it. It took time for Novo Nordisk to reach that level of access. Investors are curious to learn if Eli Lilly’s path is any easier. Access is just one barrier. Novo and Lilly have also been working hard to boost manufacturing capability, but supply has been strained trying to meet the demand. A wealthy valuation LLY 1Y mountain Eli Lilly shares over the past yr. But even excellent news about Zepbound’s launch may not be enough to propel Lilly’s stock higher. Goldman’s Shibutani has a neutral rating on Lilly shares and a price targe of $600, which suggests shares could fall nearly 5% from they began the week. His expectations are considerably lower than the typical analyst price goal of about $653, according to FactSet. Shibutani’s view speaks to Lilly’s wealthy valuation. While most pharmaceutical corporations tend to trade at around 18 times earnings and Lilly’s historic average over the past decade is around 22 times, its shares have these days been approaching a multiple of nearly 40 times earnings. While Lilly’s opportunity in obesity treatments steals a lot of the attention as of late, the Indianapolis-based company also has other promising products in its pipeline, leaving some analysts more upbeat in regards to the stock’s outlook and the potential for further upside. Bank of America analyst Geoff Meacham is on this camp. He has a buy rating on Lilly shares, and expects the stock could hit $700 over the following 12 months. Lilly is one in all Bank of America’s favorite large-cap biopharma stocks due to its “best-in-class” portfolio, including promising immunology and oncology treatments. Within the near future, the FDA is expected to approve donanemab, an Alzheimer’s disease treatment. Other potential catalysts for the stock later this yr shall be readouts on research Lilly is conducting on tirzepatide because it explores its potential as a treatment for other conditions similar to non-alcoholic steatohepatitis (NASH), a variety of liver disease, and obstructive sleep apnea. These studies could expand the variety of patients who will give you the chance to use Mounjaro and Zepbound. ‘Numerous angst’ But heading into earnings, next due on Feb. 6, Meacham said there’s often “a lot of angst.” One area that would prove trickly is Lilly’s 2024 earnings forecast. Morgan Stanley analyst Terence Flynn said his view was 3% below the typical estimate on Wall Street on the time he wrote a Jan. 11 research note, as he expects a “more significant step up” in operating expenses. “We see the arrange for the stock similar to the corporate’s 2023 guidance outlook — where revenue was barely ahead of consensus and EPS was below, but investors are generally focused on the top-line growth outlook nearer-term,” said Flynn, who has the equivalent of a buy rating on Lilly shares. Zepbound is tracking above Morgan Stanley’s prior estimates, which prompted Flynn to raise his 2024 sales estimate for the product to $5.5 billion from $3 billion previously. At the identical time, he anticipates that the variety of prescriptions for Trulicity and Mounjaro shall be lower than previously forecast. This trend might be occurring as patients switch to Zepbound from Mounjaro or Trulicity. According to Flynn, Lilly has said that about a third of Trulicity patients stop taking the drug every year for one reason or one other. By 2025, Flynn estimates Mounjaro and Zepbound supply challenges will ease, allowing Zepbound sales to reach $11 billion, which is higher than his prior estimate of $5 billion, and the typical analyst consensus. Add in Mounjaro and the tirzepatide drugs as a class will reach $23 billion, he said. But even when Lilly shares sell off on the earnings news, the investment case is likely to remain intact because “there’s just such a scarcity of value and growth names like this one,” Meacham told CNBC. “I’d say prior to now couple of quarters, the stock has really been under pressure because they are going to disappoint any individual … but the basic case is 100% supported, even with this multiple, so I feel that is why normally the stock sells off, after which the following day greater than makes it up.” —CNBC’s Michael Bloom contributed to this report.