After a bruising year, Novo Nordisk (NYSE:NVO) is back in favour.
Berenberg has upgraded the Danish drugmaker to 'buy', setting a target price of DKK425 against a current DKK359. That offers about 20% upside and, more importantly, signals that Novo is “no longer the elephant in the room” in the obesity debate.
The shares were up 1.5% in afternoon trading at DKK364.35.
But they have collapsed by roughly two-thirds from their mid-2024 peak, hit by supply issues, guidance downgrades and the perception that Eli Lilly’s rival drug Zepbound had left Novo’s Wegovy looking second best.
That slump, however, has reset expectations. Consensus forecasts have been cut and the stock now trades at a steep discount to its historical averages. On 2026 earnings, it is priced at about 14.5 times, compared with a 10-year average some 35% higher.
The case for optimism is multi-layered. First, Wegovy is regaining momentum.
Novo’s deal with CVS Caremark has made it the only obesity drug reimbursed on that pharmacy chain’s national formulary, forcing thousands of patients off Zepbound.
Prescription trends show an uptick since July. Label expansions are also helping: the US regulator has approved Wegovy for fatty liver disease, with a heart failure nod expected before year-end. Real-world data suggesting cardiovascular benefits further bolster its profile.
Second, the pipeline is deeper than many assume. Oral Wegovy, due in 2026, could prove more competitive than expected, while CagriSema, a combination therapy, is seen by doctors as a strong follow-up option even if Zepbound remains first choice.
Berenberg’s sales forecasts for CagriSema are 25% ahead of consensus by 2030. Beyond obesity, trials in Alzheimer’s, cardiovascular and rare diseases could spring upside surprises.
Novo’s new chief executive, Michael Doustdar, has also begun to steady the ship with a cost-cutting programme designed to free up DKK8 billion annually for reinvestment in research and commercial push. Investors will be looking for him to articulate a clear strategy later this year.
Risks remain. Price erosion in the US obesity market is likely to accelerate, especially once oral drugs arrive, and semaglutide faces Medicare price cuts from 2027.
Product concentration around Ozempic and Wegovy is another concern. But with expectations reset and a refreshed pipeline, Novo has a chance to prove it is more than a one-drug story.