Morgan Stanley Downgrades Novo Nordisk
Morgan Stanley downgraded Novo Nordisk A/S to Underweight from Equal‑weight, maintaining a price target of 250 Danish crowns, which represents more than 10 % downside from the last closing price. The downgrade was driven by a subdued mid‑term growth outlook and the impending loss‑of‑exclusivity (LOE) for semaglutide, the key ingredient in Ozempic and Wegovy.
The bank projects revenue and EBIT growth of only 2‑3 % in 2027, broadly in line with consensus, and a compound annual growth rate of 4 % for both revenue and EBIT from 2027 to 2030, which is below the 4 % revenue and 7 % EBIT growth expected for the broader European pharmaceutical sector.
Semaglutide accounted for 75 % of Novo’s sales in 2026 and is expected to face a large patent cliff across Europe and the United States in the early‑to‑mid 2030s. Morgan Stanley’s model still assumes semaglutide will represent 59 % of sales in 2031, the year when LOE impact begins.
The analysts estimate that Novo’s oral obesity franchise could generate $10 billion in sales by 2031, but they state that this amount will not be sufficient to offset the pricing and competitive headwinds anticipated after the semaglutide patent expiry.
A proprietary survey of 200 primary‑care physicians indicated growing adoption of GLP‑1 drugs for diabetes and obesity, yet also signalled a potential market‑share loss for Novo over the next 18 months to Eli Lilly’s current offerings and its upcoming retatrutide, expected in 2027.
Valuation‑wise, Novo trades at 12.5 × its estimated 2027 earnings, offering a 7 % discount to European large‑pharma peers while commanding a 35 % premium to global peers facing similar LOE issues such as Sanofi and GSK. The premium is especially pronounced versus GSK (10 ×) and Sanofi (8 ×).
The bank expects limited scope for major announcements at Novo’s capital‑markets day on 21 September, although management is likely to reiterate its vision for the oral obesity market and provide updates on business‑development priorities, including MASH and chronic kidney disease programmes.
Key upside risk identified by Morgan Stanley is the possibility that oral obesity treatments capture a larger patient share than currently modelled and prove more resilient to competitive and generic pressure.
The downgrade prompted Novo’s shares to fall 2.6 % in early Copenhagen trading.