Novo Nordisk Slides on Morgan Stanley Downgrade Over Demand Fears
Analysts cite slowing growth for weight-loss drugs Ozempic and Wegovy and rising competition as key concerns for the Danish drugmaker.
Shares of Novo Nordisk (NVO) fell in pre-market trading after Morgan Stanley downgraded the Danish pharmaceutical giant to 'underweight' from 'equal weight,' citing significant concerns about the future demand for its blockbuster GLP-1 drugs, Ozempic and Wegovy.
The investment bank slashed its price target for the company, arguing that the explosive growth phase for the popular weight-loss and diabetes treatments may be tapering off. The downgrade is rooted in analysis showing that in the United States, a critical market for the company. Morgan Stanley's report projects a potential decline in Novo Nordisk's U.S. GLP-1 diabetes franchise by 2026, fueled by both market share and pricing pressures.
Adding to the headwinds, the report highlights an increasingly fierce competitive landscape. The success of Ozempic and Wegovy has drawn a wave of competitors, with intensifying the battle for market share in the lucrative obesity treatment space. This competitive dynamic is expected to put a damper on growth and place pressure on profit margins as the market matures.
Beyond the U.S. market, Morgan Stanley outlined further risks, including the anticipated introduction of generic competition for Ozempic in Canada and other international markets. The firm also cast doubt on the potential for Novo Nordisk's GLP-1 treatments in other therapeutic areas, suggesting that are unlikely to achieve statistical significance. Given these combined factors, the bank's analysts now anticipate downward revisions to consensus earnings estimates for 2026 and 2027, signaling a more challenging road ahead for the one-time market darling.