Novo Nordisk A/S

(New York Stock Exchange)
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Slightly Bearish -20

Novo Nordisk stock target cut at Citi on lack of margin growth

Analyst downgrade Earnings report Guidance lowered AI-generated analysis

πŸ“‰ Citi Research cut its price target on Novo Nordisk to 296 Danish crowns from 310 due to guidance for broadly stable margins through 2030.

πŸ“Š The analyst firm lowered adjusted operating profit forecasts for 2028-2030 by 2% to 4% and reduced expected EPS growth to 9% from 12%.

πŸ’° Citi raised its 2026 and 2027 adjusted operating profit forecasts by 2% to 3%, citing higher sales of the Wegovy pill outside the U.S.

πŸš€ Novo Nordisk intends to launch the Wegovy pill in at least 20 countries by the end of 2027, covering two-thirds of its current obesity market.

πŸ’΅ Citi lifted its peak sales forecast for the Wegovy pill to $13 billion from $10 billion following a strong UK launch with 1 million packs distributed.

πŸ“‰ Q3 sales are forecast at kr73.5 billion, down 4% at constant currency, driven by rebate adjustments and prescription declines for Ozempic in the U.S.

⚠️ IFRS earnings per share are expected to drop 8% to kr4.15 due to an impairment after the failure of ziltivekimab in the ZEUS trial.

πŸ₯ Analysts warn that poor visibility on injectable Wegovy pricing and growing long-term threats from competitors like Eli Lilly and Pfizer may keep investors on the sidelines.

Bullish Signals
  • Citi raised its adjusted sales forecasts by 3% for 2026 and 1% for 2027, driven by higher expected sales of the Wegovy pill outside the United States.
  • The company plans to launch the Wegovy pill in at least 20 countries by the end of 2027, aiming to cover two-thirds of the obesity market it currently serves.
  • Citi lifted its peak sales forecast for the Wegovy pill to $13 billion from $10 billion following a strong UK launch where 1 million packs have been distributed since July.
Risk Factors
  • Citi cut its price target due to guidance for broadly stable margins through 2030, which leaves little room for future margin growth.
  • Adjusted operating profit forecasts for 2028-2030 were lowered by 2% to 4%, and expected annual EPS growth was cut from 12% to 9%.
  • Q3 sales are forecast at kr73.5 billion, down 4% at constant currency, due to a roughly kr3 billion rebate adjustment in the year-earlier quarter.
  • Ozempic prescriptions declined 15% in the U.S., and there are continued price declines for injectable Wegovy affecting revenue.
  • IFRS earnings per share are expected to fall 8% to kr4.15, mainly because of an impairment after the failure of ziltivekimab in the ZEUS trial.
Full Analysis
Citi Research has lowered its price target on Novo Nordisk (NVO) to 296 Danish crowns from 310, maintaining a neutral rating. The analysts cited the company's guidance for broadly stable margins through 2030 as the primary driver, noting that this leaves little room for future margin expansion. Consequently, Citi reduced its adjusted operating profit forecasts for the 2028-2030 period by 2% to 4%. The downgrade reflects a shift in valuation assumptions, with Citi now expecting Novo Nordisk to trade at 14 times 2027 earnings compared to a previous expectation of 15 times. Additionally, the expected annual earnings-per-share growth rate for 2027-2030 was cut from 12% to 9% due to the lack of anticipated margin growth. Despite these headwinds, Citi raised its short-term adjusted operating profit forecasts for 2026 and 2027 by 2% to 3%, driven by higher expected sales of the Wegovy pill outside the United States. Looking at specific product performance, Citi lifted its peak sales forecast for the Wegovy pill to $13 billion from $10 billion, citing a successful UK launch where 1 million packs have been distributed since July. The company plans to launch the Wegovy pill in at least 20 countries by the end of 2027, aiming to cover two-thirds of the obesity market it currently serves. However, analysts remain cautious about long-term threats from competitors and poor visibility on injectable Wegovy pricing. For the upcoming third-quarter results report on Nov. 4, Citi forecasts sales of kr73.5 billion, down 4% at constant currency, despite the new pill launch. The decline is attributed to a roughly kr3 billion rebate adjustment in the year-earlier quarter, continued prescription declines for Ozempic in the U.S., and price declines for injectable Wegovy. Furthermore, Citi expects IFRS earnings per share of kr4.15, down 8% from a year earlier, primarily due to an impairment following the failure of ziltivekimab in the ZEUS trial.