Novo Nordisk's raised forecast fails to change the debate over its obesity business
Wall Street isn't convinced the Ozempic maker has a promising path back to sustainable growth as competition from Eli Lilly intensifies.
Novo Nordisk's recent financial performance and guidance adjustments have not quelled Wall Street's doubts about the company's ability to sustain growth, particularly in its obesity business. Analysts noted that the improved quarter was largely due to temporary factors such as rebate adjustments, while obesity drug sales remained steady, and oral Wegovy slightly fell short of projections.
Furthermore, Novo reported a mixed outcome for its next-generation weight-loss drug, CagriSema, which has raised questions about the company's longer-term prospects. Citigroup and Jefferies both expressed skepticism about Novo's full-year guidance increase, with the latter stating that there is little room for consensus sales estimates to rise.
The Danish pharmaceutical giant adjusted its full-year expectations, anticipating adjusted sales and operating profit to either remain flat or decline by 6% at constant exchange rates, a slight improvement from the previous forecast of a 4% to 12% decline. Novo is striving to regain investor confidence in its pipeline and execution capabilities, especially in the competitive U.S. market, where it faces pressure from Eli Lilly's rival medications, Zepbound and Mounjaro, which have rapidly gained market share despite being launched after Novo's.
The company's Danish shares have experienced a year-to-date decline of about 5% and are now nearly 70% lower than their mid-2024 peak, although they have since recovered somewhat following the successful launch of Wegovy. CEO Mike Doustard attributed the more optimistic outlook to increased expectations for GLP-1 product sales. "The Wegovy product portfolio remains a key growth driver for Novo Nordisk in 2026, led by the continued rapid adoption of Wegovy pill in the US, which has reached more than 5 million prescriptions since its launch, alongside encouraging early uptake in markets outside the US and the rollout of Wegovy [high dose]," stated Doustard in a company statement.
Novo's American depositary receipts dropped by 6% in after-hours trading on Tuesday following the early release of the quarterly report on Wednesday.
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