"Utterly disappointed"! Deutsche Bank downgrades Novo Nordisk's rating for the first time
I'm LongbridgeAI, I can summarize articles.Novo Nordisk's key weight loss drug CagriSema's clinical results are not as good as Eli Lilly's, triggering a rare downgrade wave: Deutsche Bank downgraded its rating for the first time in five years, and JP Morgan lowered it to "neutral" while cutting sales expectations by 63%. The stock price plummeted 16% on Monday, with only 37% of analysts giving a "buy" rating. Market focus has shifted to the Phase III data of ziltivekimab, which may become a key catalyst
Novo Nordisk encountered setbacks in key clinical trials for its weight loss drug, triggering a rare wave of downgrades from Wall Street investment banks, with Deutsche Bank lowering the company's stock rating for the first time in five years.
According to data released by Novo Nordisk on Monday, its weight loss drug CagriSema, awaiting approval from the U.S. Food and Drug Administration (FDA), performed worse than similar products from its main competitor, Eli Lilly. In light of this negative development, Deutsche Bank analyst Emmanuel Papadakis downgraded Novo Nordisk's rating from "Buy" to "Hold."
This news sparked a severe market sell-off. After plummeting 16% on Monday, Novo Nordisk's stock continued to decline by 2% in early trading in Copenhagen, as investor concerns about the competitiveness of the company's core pipeline rapidly intensified.
JP Morgan subsequently joined the downgrade ranks, significantly cutting sales expectations for the related drugs. As pessimism spread, the proportion of bullish sentiment on Wall Street for the stock has fallen to its lowest level in years, highlighting a reassessment of the company's growth prospects.
Mid-term Outlook Clouded, Investment Banks Significantly Cut Expectations
Deutsche Bank analyst Emmanuel Papadakis, while downgrading the rating, also cut the target price by 31%. He noted that prior to this setback, considering the momentum of the oral version of Wegovy and the company's conservative guidance, he could have accepted expectations of nearly double-digit revenue declines. However, he now believes that Novo Nordisk's mid-term outlook has been substantially impacted.
JP Morgan also reacted swiftly. A team led by analyst Richard Vosser downgraded Novo Nordisk's rating from "Overweight" to "Neutral." More severely, JP Morgan slashed its sales forecast for CagriSema for the years 2027 to 2030 by as much as 63%.
With investment banks collectively turning against the stock, market consensus is undergoing a significant shift. According to FactSet data, the proportion of analysts rating Novo Nordisk as "Buy" has fallen to its lowest level since the end of 2021, now only accounting for 37%.
Market Consensus and Potential Catalysts After Stock Price Plunge
Despite facing a new wave of downgrades and a sharp drop in stock price, Wall Street still retains some room for overall valuation of Novo Nordisk. Data shows that even after a series of rating cuts, the stock's current average target price is still about 38% higher than its current trading price.
As the weight loss drug pipeline faces setbacks, market focus may partially shift to the company's other research and development pipelines . JP Morgan particularly highlighted a key catalyst for Novo Nordisk outside the obesity field— the drug ziltivekimab.
Phase III clinical data for this drug is expected to be released in the third quarter of this year. The data will validate whether the drug can effectively reduce the risk of cardiovascular events in patients with established atherosclerotic cardiovascular disease, chronic kidney disease, and systemic inflammation, which could become a key factor influencing Novo Nordisk's next market performance