Novo Nordisk Cuts 9,000 Jobs and Slashes Guidance. Why the Stock Is Rising.

Novo Nordisk said Wednesday that it would slash about 9,000 jobs as part of a restructuring effort. (SERGEI GAPON/AFP via Getty Images)

Novo Nordisk stock rose in overseas trading after the maker of Ozempic and Wegovy said it would slash about 9,000 jobs as part of a cost-cutting effort.

Novo’s Danish-listed shares climbed 2.1% to just under 344 Danish kroner, while its American depositary receipts were 0.3% lower shortly after the U.S. opening bell. The S&P 500 was up 0.5%.

Created with Highcharts 9.0.1Novo Nordisk stockSource: FactSet

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The moves came after Novo said it would reduce its global workforce by 11%, with around 5,000 of the job cuts expected in Denmark. The company forecast that the cuts would deliver annual savings of 8 billion kroner ($1.25 billion) by the end of 2026.

The cost-cutting measures could help ease investors’ fears about slowing earnings growth over the medium term for Novo. The company has struggled to defend its market share over the past year as it has had to compete with legal knockoff weight-loss drugs.

The company expects to incur one-off restructuring costs of about 8 billion kroner from the measures. As a result, it now expects operating profit growth of between 4% and 10% for this year, down from a previous forecast of 10% to 16%.

The market seemed happy to look past the one-off costs and subsequent guidance cut as the stock jumped Wednesday.

But it is the second time in six weeks that Novo has lowered its profit guidance. The company previously cut its earnings and sales forecasts in July, citing persistent competition for its weight-loss drug Wegovy from cheap compounded knockoffs. That led to shares plummeting 22%.

The company has also changed CEO this year. Company veteran Mike Doustdar succeeded Lars Fruergaard Jørgensen, who was ousted in May.

“We see today’s move as the first action of the new Novo CEO,” said UBS analyst Matthew Weston. He rates the stock at Neutral with a 340 kroner price target.

“Following a period of hyper-growth in employee numbers, Novo is re-sizing headcount…The key question is when could the topline see the benefit of the reinvestment and what pipeline assets warrant further spending.”

Write to George Glover at george.glover@dowjones.com