On Monday, Bernstein reiterated its underperform rating on Novo Nordisk (CSE:NOVOb) (NOVOB:DC) (NYSE: NYSE:NVO), maintaining the price target at DKK560.00. The pharmaceutical giant, with a market cap of $365 billion and impressive 26% revenue growth over the last twelve months, has seen its stock decline by 21% in the past week.
According to InvestingPro analysis, the stock is currently trading below its Fair Value. The firm's analysis followed Novo Nordisk's release of trial results for the obesity treatment CagriSema. The trial, dubbed REDIFINE 1, included 3,417 patients over a 68-week period with an average baseline body weight of 106.9 kilograms. CagriSema, administered as a subcutaneous weekly injection, demonstrated a 22.7% body weight reduction based on the trial product estimand, or 20.4% according to the treatment policy estimand.
The results, however, fell short of expectations. Novo Nordisk had aimed for a weight loss closer to 25% to set CagriSema apart from competitors, specifically Eli Lilly (NYSE:LLY)'s Zepbound, which showed a 22.5% or 20.9% weight reduction based on the treatment regimen estimand at 72 weeks. The comparable performance of CagriSema to Zepbound, which is already available on the market, was noted as a disappointment since Novo Nordisk sought to establish a superior weight loss profile for its product.
CagriSema is Novo Nordisk's advanced obesity treatment, combining the currently marketed GLP-1 semaglutide (Wegovy) with cagrilintide, an amylin analogue. The goal for CagriSema was to demonstrate a more effective weight loss result when compared to Zepbound, which also uses a dual mechanism of action: GLP-1/GIP.
Despite the anticipation for Novo Nordisk's next-generation obesity product to outperform its predecessor, the trial results have not met the company's own benchmarks for differentiation in the market. The analyst's comments reflect the competitive landscape of obesity treatments and Novo Nordisk's position within it following the latest clinical data.
With an industry-leading gross margin of 85% and strong financial health score on InvestingPro, which offers 13 additional exclusive insights about the company's performance and prospects through its comprehensive Pro Research Report, the company maintains its position as a prominent player in the pharmaceutical industry.
In other recent news, Novo Nordisk experienced a significant adjustment in its share target, downgraded to $105 from $156 by BMO Capital Markets.
This adjustment comes following the phase 3 clinical trial results of Novo Nordisk's CagriSema, which fell short of investor expectations. Despite this, the firm maintained its Outperform rating on the healthcare company's stock, suggesting a continued positive outlook. Novo Nordisk's impressive revenue growth of 26% in the last twelve months was also highlighted.
In a series of other developments, Novo Nordisk's obesity drug trial, CagriSema, resulted in less weight loss than expected, causing a market value loss. This development led to a review by the European Medicines Agency of studies suggesting a link between Novo Nordisk's diabetes drug, Ozempic, and a rare eye condition. Furthermore, the company received regulatory clearance for its pending transaction with Catalent (NYSE:CTLT), Inc., marking the completion of a strategic move to private ownership under Novo Holdings.
In terms of analyst ratings, CFRA initiated coverage on Novo Nordisk with a Hold rating and a price target of $122.00. This rating takes into account the company's higher growth prospects and profit margins compared to its competitors. In contrast, TD Cowen maintained a Buy rating on Novo Nordisk, emphasizing its potential for long-term growth and a promising pipeline.
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