Bernstein reiterates Novo Nordisk stock with DKK620 target

On Wednesday, Bernstein SocGen Group maintained their Market Perform rating on Novo Nordisk (CSE:NOVOb) (NOVOB:DC) (NYSE: NYSE:NVO) shares, along with a price target of DKK620.00. The pharmaceutical giant, with a market capitalization of over $402 billion, has demonstrated robust financial performance with a 25% revenue growth over the last twelve months. According to InvestingPro analysis, Novo Nordisk maintains a "GREAT" financial health score, reflecting its strong market position. The firm’s analyst highlighted the anticipated decline in the availability of compounding pharmacies’ products in the U.S. This development aligns with previous expectations and follows the recent removal of Wegovy from the FDA’s drug shortage list. Novo Nordisk’s Chief Financial Officer had indicated at the company’s Capital Markets Day in London that there would be an increase in the supply of Wegovy starting doses for new obesity patients this year, with about 20,000 new prescriptions being written weekly. The company’s impressive 85% gross profit margin and strong cash flows support its ability to scale production effectively. For deeper insights into Novo Nordisk’s financial metrics and growth potential, InvestingPro offers comprehensive analysis with 13+ additional ProTips.

Compounding pharmacies, which have been a temporary source for certain drugs when they are listed on the FDA’s drug shortage list, are expected to stop supplying their products in the coming months. This situation arose when Novo Nordisk’s manufacturing capacity was unable to meet demand, similarly to what occurred with Eli Lilly (NYSE:LLY)’s Zepbound. The analyst noted that although most patients using products from compounding pharmacies do so for short-term cosmetic reasons and might not have extensive healthcare coverage or eligibility for treatment, the ceasing of supply by these pharmacies is still considered positive news for Novo Nordisk’s market sentiment.

The report further stated that in order to reach the fiscal year’s group sales growth guidance of 20%, there is a need for a 30% increase in prescription volumes. This is especially important given the existing pricing pressures, such as those from the Inflation Reduction Act (IRA) risk, and the competition Novo Nordisk faces from companies like Eli Lilly. The analyst’s comments reflect a cautious optimism for Novo Nordisk, acknowledging that while the news is favorable, significant growth in prescriptions is necessary to achieve the company’s financial objectives for the year. Trading at a P/E ratio of 28.5, the stock appears relatively expensive compared to its near-term earnings growth potential. Discover more detailed valuation metrics and access the comprehensive Pro Research Report covering Novo Nordisk through InvestingPro, part of our coverage of 1,400+ top US stocks.

In other recent news, Novo Nordisk has received significant attention from analysts and regulatory bodies. The company reported that the U.S. Food and Drug Administration (FDA) approved its diabetes medication, Ozempic, for a new use in reducing the risk of worsening kidney disease and cardiovascular death in adults with type 2 diabetes and chronic kidney disease. This approval positions Ozempic as the only glucagon-like peptide-1 receptor agonist authorized for this additional indication. Analysts at BMO Capital Markets have maintained an Outperform rating on Novo Nordisk, with a price target of $105, reflecting confidence in the company’s growth potential.

Meanwhile, TD Cowen also reiterated a Buy rating for Novo Nordisk, with a price target of $105, following meetings with the company’s senior leadership. The improved availability of Wegovy and intensified marketing strategies are expected to support the performance of Novo Nordisk’s diabetes drug, Ozempic. Bernstein analysts raised their price target for Novo Nordisk to DKK620, highlighting the potential of the next-generation obesity product, CagriSema, despite some delays in its U.S. submission.

Morgan Stanley (NYSE:MS) initiated coverage on Novo Nordisk with an Equalweight rating and a price target of DKK 700, citing the potential in the obesity treatment market. The firm acknowledges the promising outlook but notes possible challenges in market penetration and pricing. These recent developments underscore the ongoing interest and strategic moves in Novo Nordisk’s portfolio, particularly in the diabetes and obesity treatment markets.

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