Citi has kept its 'neutral' rating on Novo Nordisk (NYSE:NVO), arguing that the market's reaction to a failed heart drug trial looks somewhat overdone while flagging deeper concerns about pricing and competition in obesity.
The Danish group announced that ziltevekimab, an anti-inflammatory antibody targeting the protein interleukin-6, missed the primary endpoint of its ZEUS trial.
The late-stage study found no reduction in major adverse cardiovascular events against placebo in patients with atherosclerotic cardiovascular disease, chronic kidney disease and inflammation.
The hazard ratio came in at 0.99, indicating effectively no difference between the drug and placebo.
A higher proportion of patients on ziltevekimab also suffered serious infections.
Citi's model assumes peak sales of roughly $3 billion for the drug across three indications, risk-adjusted down to $1.7 billion, which accounts for just 3% of its discounted cash flow valuation.
That figure is in line with consensus, which puts peak sales at $1.7 billion by 2035.
Two further late-stage trials of the drug continue: HERMES in heart failure with preserved ejection fraction and ARTEMIS in acute myocardial infarction.
Both are event-driven, with results expected in the first half of 2027, though Citi expects confidence in them to be diminished by Monday's data.
The bank thinks investors will wait for Novo's results in three weeks before passing further judgement on the shares.
The wider issue is the one that has dogged Novo for the past year.
Citi is holding at neutral because of medium- and long-term worries about pricing and competition in the obesity market, where the GLP-1 class of appetite-suppressing drugs that made the company Europe's most valuable business now faces mounting rivalry from Eli Lilly and a wave of oral formulations.
Diversification beyond that franchise is precisely what trials such as ZEUS were meant to deliver.