Bernstein upgrades Novo Nordisk to “outperform” on $130 bln obesity drug market

Investing.com -- Novo Nordisk received an upgrade to “outperform” from "market perform" by analysts at Bernstein, who said the market is overlooking the Danish drugmaker’s potential in obesity treatments. 

The analysts pointed to a series of catalysts, despite a steep slide in the company’s share price this year.

“Novo has underperformed the Pharma sector by c.40% year to date, and the shares are down 60% from the alltime high in June 2024 - a c$400bn loss in market cap,” the brokerage said. 

Analysts attributed the drop to weaker Wegovy sales, increased competition from Eli Lilly, and two profit warnings in 2025.

The analysts set a new price target of DKK540, trimmed from DKK620 but still representing a 54% upside from Novo’s September 5 close at DKK350. 

They forecast Novo will maintain about 30% of the global obesity market, which they expect to reach close to $130 billion at peak. 

U.S. patient numbers are projected to rise from 4 million today to 14 million in 2030 and 25 million by the end of the next decade.

Bernstein said the upgrade rests on three main factors. First, Wegovy prescriptions in the U.S. are likely to rebound in 2026 when copycat semaglutide products from compounding pharmacies are banned. 

“These products account for 30% of the US obesity market and 80%, we estimate, are semaglutide. These are illegal copycat versions of the patented molecule semaglutide, and are manufactured in China mainly in non-FDA approved plants, a situation that in our view is not sustainable in a highly regulated country where safety matters,” the analysts said. If half of these patients switch to Wegovy, they said, prescriptions could rise 30%.

Second, the expected U.S. approval of oral semaglutide by the end of 2025 and its 2026 launch is set to expand Novo’s portfolio. 

Bernstein estimated the drug could generate $6.4 billion in sales by 2030. While it will compete with Lilly’s orforglipron, analysts said Novo’s pill showed stronger efficacy and tolerance.

Third, CagriSema, a combination of semaglutide and cagrilintide, is expected to post head-to-head trial results against Lilly’s Zepbound in early 2026. “Based on the data available so far, we think the drug should show superior weight loss at 82 weeks (>20%),” the brokerage said. 

Analysts forecast $11 billion in 2030 sales from the treatment, which would make it one of Novo’s top revenue drivers.

Bernstein said the upgrade also reflects stronger contributions from new products, particularly CagriSema and Amycretin, which reduce Novo’s reliance on semaglutide. 

“The percentage of Novo sales exposed to semaglutide generics from 2031/32 in diabetes and obesity (Ozempic and Wegovy, but not Rybelsus in our view) is c.45%,” the analysts said, compared with more than 70% a year ago.

The brokerage flagged Novo’s new chief executive, Mike Doustdar, who took over in August after leading international operations. Analysts said his task will be to re-energize obesity launches. 

“New CEO (Mike Doustdar, former head of international operations) needs to convince investors that Novo will re-energise the franchise and execute on the new products launches,” the brokerage said.

Despite risks from pricing and competition, Bernstein projected Novo’s earnings to grow at 12% annually between 2025 and 2030, above the pharmaceutical sector average. “Our new PT of DKK540 implies >50% upside,” the analysts saod.