On Tuesday, CFRA analyst Wan Nurhayati revised the price target for Novo Nordisk (NYSE:NVO) shares, reducing it to $90 from the previous target of $122. Despite the price target cut, the analyst retained a Hold rating on the stock. With a market capitalization of $348 billion and strong revenue growth of 26% over the last twelve months, Novo Nordisk remains a dominant force in the pharmaceutical industry. According to InvestingPro analysis, the company is currently trading below its Fair Value.
Wan Nurhayati explained the adjustment of the price target to $90, which is based on a valuation of 23.4 times the projected 2025 earnings per American Depositary Share (ADS), a figure still above the peer average of 13 times. This valuation accounts for Novo Nordisk's anticipated higher growth and margins, supported by its impressive 84.66% gross profit margin. InvestingPro subscribers can access 12 additional key insights about Novo Nordisk's valuation and growth prospects through the platform's comprehensive Pro Research Report.
The Centers for Medicare & Medicaid Services recently announced a list of 15 additional medications to be included in the second round of U.S. price negotiations, which features Novo Nordisk's Ozempic, Rybelsus, and Wegovy. These drugs, used to treat obesity and diabetes, are known for their high costs. The analyst noted that the inclusion of these drugs is expected, given their expense.
Price negotiations could potentially lead to substantial price reductions, similar to what was observed in the previous year when selected drugs saw price cuts ranging from 38% to 79%. While a significant price reduction could impact future sales growth for Novo Nordisk, the analyst anticipates that the company will maintain its leading position in the obesity treatment market.
Novo Nordisk has faced several challenges recently, including the latest news of the drugs' inclusion in the price negotiation list and a disappointing trial result for a higher dose of Wegovy. These factors are believed to have the potential to continue influencing market sentiment negatively in the near term.
In other recent news, Novo Nordisk, a prominent player in the pharmaceutical industry, has been the subject of various analyst evaluations. BofA Securities maintained a Buy rating on the company's shares, highlighting potential growth factors, despite recent stock performance downturns. Similarly, Guggenheim Securities held a Buy rating and raised the price target slightly. UBS upgraded the company's stock from a Sell to a Buy rating, while Bernstein revised its rating from 'Underperform' to 'Market Perform'.
These evaluations follow recent developments, including the announcement of results from Novo Nordisk's STEP UP obesity trial, which showed significant weight loss with Semaglutide 7.2 mg. However, the outcomes of the CagriSema Phase 3 study in obesity did not meet all expectations, which has been a concern for investors.
Furthermore, the company's fourth-quarter revenues of 2024 are forecasted at DKK 78,177 million, with earnings per share (EPS) of DKK 5.86, according to Guggenheim. For the full year of 2024, estimates stand at DKK 22.15 in EPS and DKK 282,897 million in sales. Looking ahead to 2025, Guggenheim anticipates EPS of DKK 28.10 and sales of DKK 341,134 million.
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