Shares in Novo Nordisk (NYSE:NVO) are under the spotlight after a surprise profit warning, which, while denting the share price, failed to the wreak the damage some might have feared.
That said, the 3.6% fall in the stock piles on the pain for the Ozempic maker, which was formerly Europe's most valuable company.
Year to date, 47% has been eroded from the value of the business, which is losing ground in the multi-billion dollar weight loss arena to America's Eli Lilly and Co (NYSE:LLY) and its 'King Kong' jab Mounjaro and cheaper 'compounded' formulations.
Any hopes that Novo's next-generation treatment could turn the tables were eviscerated earlier this year by underwhelming clinical trial data.
In the wake of Wednesday's setback, UBS placed its 'buy' rating and DKr600 price target under review, which is never a good look, particularly coming from such an influential former cheerleader.
Briefly, the details of Novo's latest travails are thus: the diabetes and obesity specialist cut its full-year guidance for 2025.
It blamed weaker-than-expected sales of its GLP-1 weight-loss drug Wegovy in the US and overseas, along with stiffer competition for Ozempic (which contains the same active ingredient as the fat jab but is used to treat type II diabetes).
Novo now expects sales to grow 8-14% in constant currency this year, down from an earlier forecast of 13-21%. The guidance for operating profit growth has also been trimmed to 10-16% from 16-24%.
UBS had warned that US sales growth for GLP-1 drugs would need to accelerate sharply to meet previous guidance, but said the size of the downgrade took both analysts and the wider market by surprise.
A major issue is the persistence of unapproved “compounded” semaglutide in the US market, which is significantly cheaper than branded versions and continues to siphon off potential customers.
Novo has also announced a new CEO, promoting from within, though some investors had hoped for an external candidate with stronger US experience.
UBS is now reassessing its forecasts, noting that the long-term outlook will depend on Novo’s ability to address the compounding threat and navigate ongoing US competition and pricing pressures.