Investing.com — Bank of America (BofA) adjusted its price objective for Novo Nordisk (NYSE:) shares to DKK1075 from the previous DKK1150, aligning with changes in earnings per share (EPS) forecasts.
The bank’s price target for Novo’s US-listed shares was also reduced from $166 to $159.5.
The adjustments come amid a more conservative outlook on the company’s flagship products, Wegovy and Ozempic, due to slower growth and supply ramp-up.
BofA now anticipates Novo Nordisk’s third-quarter sales to reach DKK69.4 billion, marking an 18% year-over-year increase, with earnings before interest and taxes (EBIT) expected to be around DKK33 billion, up 23% from the previous year. These figures are slightly below the consensus, with Wegovy’s sales projected to be around DKK16.5 billion, falling short of the Visible Alpha consensus of approximately DKK17 billion.
Ozempic’s anticipated sales are DKK27.1 billion, a 13% increase, affected by a growth slowdown and previous rebate adjustments.
BofA analysts have also revised their fiscal year 2024 EPS estimates downward by approximately 2% due to Ozempic’s decelerating growth and a slower supply increase for Wegovy. The EPS forecast for fiscal year 2025 has also been reduced by around 5%, based on the extrapolation of current trends.
Despite these adjustments, BofA maintains its Buy rating on Novo Nordisk, driven by the strength of the company’s CagriSema Phase III trials and what it considers an attractive valuation.
“CagriSema PIII data in 4Q24 has become a “must-have” for the investment thesis, and investor nerves into the event are likely to drive shares flat until the “binary” data outcome is resolved,” analysts noted.
“Overall, we believe investor sentiment is a repeat of 1H23 into SELECT data. Similar to mid-23 on positive SELECT data, we now see an excessive share price move on CagriSema PIII, with c15-20% potential move in extreme scenarios. We also see valuation as very compelling, with shares back at c26x FY25E PE (price-to-earnings).”
Novo Nordisk’s shares have experienced a decline of about 25% from their peak, influenced by disappointing data from CB1 studies and subdued trends for Ozempic and Wegovy.
Analysts emphasize the need for Novo Nordisk to develop a credible oral strategy, particularly after the lackluster CB1 data and in anticipation of competitor Eli Lilly (NYSE:)’s orforglipron Phase III results in the second quarter of 2025.
They also acknowledge that maintaining confidence in a continued EPS upgrade cycle is challenging, given the current slowdown in Ozempic and the uncertain supply dynamics for Wegovy.
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