Novo Nordisk Stock Is Downgraded. There’s a ‘Tough Path Ahead.’

Novo Nordisk shares have fallen 60% since their peak in mid-2024. (SERGEI GAPON/AFP via Getty Images)

Key Points

• Morgan Stanley downgraded Novo Nordisk to Underweight from In-Line, lowering the price target to $47 from $59.
• Analysts see a 75% probability that semaglutide’s Alzheimer’s trial won’t reach statistical significance, potentially sinking shares by 9%.
• Novo Nordisk recently cut its forecast for profit growth for this year.

Novo Nordisk, the Danish maker of blockbuster drugs Ozempic and Wegovy, caught another downgrade Monday as analysts foresee increasing competition and risks over the coming six months.

Morgan Stanley analysts led by Thibault Boutherin cut their recommendation on the stock to Underweight from In-Line. They lowered their price target for the company’s American depositary receipts to $47 from $59.

“The current pace of Novo U.S. GLP-1 prescriptions make us cautious on the 2026 growth outlook,” Boutherin said in a Monday research note. The company faces a “tough path ahead,” the analyst said.

Novo slipped 2.1% to $54.43 in early trading.

Factors that could lift the stock, the analysts say, are “high-risk.” That includes a trial of how the weight-loss and diabetes drug semaglutide—the active ingredient in Ozempic and Wegovy— affects Alzheimer’s disease. They see a 75% probability that the test won’t show a statistically significant result, which they estimate could sink shares by as much as 9%.

Results from another trial pitting Novo’s next-generation obesity drug CagriSema against rival Eli Lilly’s Zepbound could also affect the stock, they say.

Management’s financial guidance for next year, which is likely to be announced in February, is also an unknown for investors. Earlier this month, the drugmaker cut its forecast for profit growth to between 4% and 10% for this year. It had forecast growth of between 16% and 24% at the beginning of the year.

Novo stock has fallen about 60% from its peak in mid 2024 as Novo has struggled to defend its market share given competition from copycat versions of its best-selling drugs, and advances by Eli Lilly and others.

U.S. prescriptions for Ozempic and Wegovy have been stagnating, Boutherin said, also noting that growth in some markets outside of the U.S. will soon start to be affected by generic competition as patents expire.

Pricing pressure, increased by overall competition, is also likely to ramp up further because semaglutide is part of negotiations under the Inflation Reduction Act, which allows Medicare to negotiate the prices it pays for certain drugs. A price announcement is likely due by November and could significantly dent Novo’s U.S. sales, Boutherin said.

Write to Elsa Ohlen at elsa.ohlen@barrons.com