Deutsche Bank recommended selling Novo Nordisk shares after they fell 70% from their peak
Such a "bearish" stance does not yet dominate on Wall Street
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Deutsche Bank downgraded its rating on shares of the Danish pharmaceutical company Novo Nordisk, known for its popular drugs Ozempic and Wegovy, from “Hold” to “Sell,” according to MarketWatch . In addition, the bank cut its price target by nearly 9%—from 290 to 265 Danish kroner (from $45 to $41)—citing lingering concerns about the company’s growth rate. The new target implies a 10% decline from the closing price in Copenhagen on August 27. The company’s shares in the U.S. fell nearly 3% on Thursday.
Why Did Deutsche Become Disappointed with Novo?
The rating revision was partly a result of Novo’s “mixed” second-quarter financial results, according to Investing .com, citing Deutsche Bank analyst Emmanuel Papadakis. In its report, the company raised its full-year earnings and revenue forecasts. But investors’ attention was focused on sales of Wegovy—Novo’s flagship weight-loss drug—which fell slightly short of expectations. In addition, trials of a new-generation obesity drug—the combination therapy CagriSema—were unsuccessful.
Ahead of Novo’s Investor Day, scheduled for September 21, “information uncertainty” persists, according to Deutsche Bank. The company’s hopes for yet another major market have been dashed: ziltivekimab, a drug for treating cardiovascular diseases, is now “effectively out of the running,” Papadakis noted in a MarketWatch report. Novo Nordisk announced in late July that late-stage clinical trials had failed to meet their primary endpoint: the drug did not result in a statistically significant reduction in the risk of cardiovascular complications.
The Deutsche analyst also noted that doubts remain as to whether the company will be able to return to steady growth in 2027. And in the long term, Novo Nordisk faces a serious threat of a “patent cliff”—the expiration of key patents, he added.
What's happening with Novo's stock?
The pharmaceutical giant’s stock has plummeted by about 70% from its peak, reached in June 2024 amid a global frenzy over weight-loss drugs. At that time, Novo Nordisk was Europe’s most valuable company, but it has since lost that title. Its stock price has fallen amid increasingly fierce competition with the American company Eli Lilly in the market for drugs for patients with diabetes and obesity, as well as the emergence of cheaper generic versions of Ozempic and Wegovy, according to The Wall Street Journal.
Novo Nordisk’s stocks have only six analyst ratings, and the most common recommendation is “hold” (three “Hold” ratings), according to MarketWatch. Two other analysts recommend buying the stock (Buy), and one recommends selling (Underweight, “below market”).
This article was AI-translated and verified by a human editor
