Bank of America Lowers Novo Nordisk Price Target

Bank of America (BofA) has revised its price objective for Novo Nordisk (NYSE:NVO) shares from DKK1150 to DKK1075, reflecting updates in earnings per share (EPS) forecasts.

The target for Novo’s US-listed shares is now set at $159.5, down from $166. These changes arise from a cautious outlook regarding the company’s main products, Wegovy and Ozempic, attributed to slower growth and supply improvements.

BofA projects that Novo Nordisk’s third-quarter sales will hit DKK69.4 billion, representing an 18% year-over-year increase, with earnings before interest and taxes (EBIT) expected around DKK33 billion, up 23% year-over-year. However, these figures are slightly below consensus estimates, with Wegovy’s sales anticipated at DKK16.5 billion, falling short of the Visible Alpha consensus of approximately DKK17 billion, and Ozempic’s sales expected at DKK27.1 billion, marking a 13% increase but affected by a growth slowdown and earlier rebate adjustments.

The bank has also cut its fiscal year 2024 EPS estimates downward by roughly 2% due to Ozempic’s slowing growth and a sluggish supply increase for Wegovy. The EPS forecast for fiscal year 2025 has been reduced by about 5%, reflecting current trends.

Despite these revisions, BofA maintains its Buy rating on Novo Nordisk, citing strength in the company’s CagriSema Phase III trials and attractive valuation. Analysts believe that data from CagriSema PIII in 4Q24 is essential for the investment thesis. They note that investor nerves prior to the data release could lead to a flat share performance until the outcomes are revealed.

Analysts predict a potential share price movement of 15-20% depending on the outcomes, viewing current valuations as compelling, especially with shares priced around 26x FY25E PE.

Novo Nordisk’s shares have dropped approximately 25% from their peak due to disappointing CB1 studies and subdued trends for Ozempic and Wegovy. Additionally, analysts underscore the need for Novo Nordisk to establish a credible oral strategy, particularly in light of the unimpressive CB1 data and upcoming results from Eli Lilly (NYSE:LLY) on orforglipron Phase III trials in Q2 2025.

They also acknowledge the difficulty in maintaining confidence in continued EPS upgrades due to the current slowdown in Ozempic and uncertain supply dynamics for Wegovy.