Jefferies has downgraded its rating on Novo Nordisk (NYSE:NVO) to "underperform" and cut its price target to DKK 575, down from the previous DKK 782.90.
The downgrade comes amid concerns over the supply of the Danish drugs giant's weight-loss drug, Wegovy, particularly in the United States, where prescriptions for the 0.25 mg starter dose have dropped significantly.
According to the American investment bank, Wegovy prescriptions in the States declined by 7% in the last week of September, outpacing the 3% decline in the broader market for glucagon-like peptide-1 (GLP-1) receptor agonists, which are used for treating obesity and diabetes.
The most notable drop was in the 0.25 mg starter dose, which fell by 37%. Jefferies analysts suggest that this reduction could indicate that Novo is restricting supplies of the starter dose, potentially due to supply chain bottlenecks.
This supply constraint is happening at a critical time when competitor Eli Lilly has resolved its shortages of competing weight-loss drugs, Mounjaro and Zepbound.
Jefferies points out that if Novo cannot resolve these issues quickly, it may face downgrades in its US Wegovy sales forecasts for the fourth quarter of 2024.
It had previously forecast American Wegovy sales to rise by 30-35% in the fourth quarter, reaching 300,000 prescriptions per week by the end of the year.
However, analysts now warn that if the starter dose shortage continues, it may be difficult for the company to meet these targets. With competitor Eli Lilly poised to take advantage of the situation, Jefferies sees risks to Novo Nordisk’s growth in the obesity market.