Novo Nordisk shares hit lowest level in over 3-years

Novo Nordisk shares dropped to their lowest level since January 2022 after the company issued a profit warning, slashing its full-year 2025 guidance. This prompted Bank of America to downgrade the stock to Neutral, citing an uncertain recovery path for key drugs Wegovy and Ozempic, compounded by the Ozempic Canadian patent expiry, looming U.S. drug pricing negotiations, and increased competition. While a new CEO was announced for August 2025, investor concerns persist regarding leadership, with consensus shifting to a mid-to-high single-digit EBIT growth for FY2026, signaling a cautious outlook due to persistent headwinds.

Analysis

Novo Nordisk (NVO) shares have retreated to levels not seen since January 2022, driven by a significant profit warning and a downward revision of its full-year 2025 guidance. This negative outlook prompted a downgrade from Bank of America to a 'Neutral' rating, citing an uncertain recovery for key drugs Wegovy and Ozempic. The investment bank highlights multiple headwinds, including the impending expiry of Ozempic's Canadian patent, looming U.S. drug pricing negotiations under the Inflation Reduction Act, and intensifying competitive pressure from Eli Lilly’s orforglipron. Consequently, consensus for FY26 EBIT growth has been revised downward from the mid-teens to a mid-to-high single-digit percentage range. Investor sentiment is further dampened by concerns over leadership, with the market reportedly hoping for an external CEO with a stronger U.S. background. While future data from Alzheimer's trials could serve as a catalyst, Bank of America cautions that sustained improvement in prescription trends (TRx) is the most critical factor for a long-term re-rating, and that low investor appetite is likely to persist without a significant shift.

Key Decisions for Investors

• Investors should reassess exposure to NVO given the downgraded FY25 guidance and the shift in consensus FY26 EBIT growth expectations from mid-teens to single digits.
• Monitor weekly prescription trends (TRx) for Wegovy and Ozempic, as the analysis suggests these are the most critical data points for a potential recovery in share price, superseding short-term trial data reactions.
• Closely track competitive developments from Eli Lilly, as the market performance of its drug orforglipron is a key headwind identified by analysts.
• Factor in heightened regulatory and patent-related risks, specifically the impact of U.S. drug pricing negotiations and the Ozempic Canadian patent expiry, which could further compress future growth and margins.