Stock fall of Novo Nordisk today
In a surprising turn of events, Wall Street analysts have expressed skepticism towards Novo Nordisk's optimistic tone, following the downgrading of the company's stock. The downgrades are primarily due to Novo Nordisk's lowered full-year sales and profit outlook, linked to ongoing challenges with its key weight-loss drug, Wegovy.
Barclays and Bank of America have downgraded Novo Nordisk from "Overweight" and "Buy" to "Equal Weight" and "Neutral" respectively. The downgrades come in response to Novo Nordisk's reduced 2025 sales and EPS forecasts, which reflect the persistent use of illegally compounded copycat semaglutide drugs, slower-than-expected market expansion, and intensified competition, especially in the U.S. market.
Barclays has cut the price target from DKK 700 to DKK 375, citing lack of visibility on volume growth recovery for semaglutide and concerns about the company's pipeline lagging behind rivals like Eli Lilly. Bank of America, on the other hand, has reduced the price target to DKK 375, trimmed 2026/2027 Wegovy sales estimates by about 20%, and lowered EPS forecasts for 2025 and subsequent years.
The downgrade factors include persistent unlawful compounding of Wegovy's active ingredient Semaglutide in the U.S., increased competition from copycat "knockoff" drugs, slower than expected market expansion for Wegovy, weaker Ozempic sales in some markets, and concerns about the lack of catalysts for investor confidence and a weaker product pipeline relative to competitors.
Despite reporting strong first-half 2025 results with 18% sales growth and 29% operating profit growth, the downgraded future guidance and competitive issues have weighed heavily on sentiment and analyst ratings. The decline in Novo Nordisk's stock occurred after competition from compounders affected the sales of its weight loss drugs, causing the shares to fall by 7.2% on Wednesday.
The drop in Novo Nordisk's shares coincides with a modest fall in the S&P 500 and the Nasdaq Composite. However, the downgrades could potentially impact the investment decisions of long-term investors in Novo Nordisk's stock. The news led to downgrades from at least two prominent analysts, with Barclays analysts downgrading Novo Nordisk's stock to "equal-weight" from "overweight" and Bank of America analysts downgrading it to "neutral" from "buy".
Despite these headwinds, the success of Novo Nordisk's weight loss drugs, Wegovy and Ozempic, has propelled the company to become the most valuable company in Europe. The company's stock is trading at one of its lowest price-to-earnings ratios (P/E) in nearly 30 years, which could be seen as an opportunity for long-term investors.
However, the new CEO of Novo Nordisk struck an optimistic tone, believing that compounders do not present a significant threat. Despite Wall Street's cautious approach, it remains to be seen if the current downgrades are a temporary setback or a sign of a more significant challenge for Novo Nordisk in the future.
- Long-term investors may need to reassess their investment decisions in Novo Nordisk's stock due to the downgrades from analysts like Barclays and Bank of America.
- The persistence of illegally compounded copycat semaglutide drugs, intensified competition, slower market expansion, and weaker product pipeline are some factors contributing to the downgrade of Novo Nordisk's stock.
- The success of Novo Nordisk's weight loss drugs, Wegovy and Ozempic, has made the company the most valuable in Europe, but its stock is currently trading at a low price-to-earnings ratio, potentially offering an opportunity for long-term investors.
- Despite the challenges and downgrades, the new CEO of Novo Nordisk maintains an optimistic outlook, believing compounders do not pose a significant threat, leaving uncertainty about the future for the company.
