Valuation of Novo Nordisk shares ‘very compelling’, says Bank of America by Investing.com

Investing.com — Bank of America (BofA) adjusted its price objective on shares of Novo Nordisk (NYSE: ) to DKK 1,075 from DKK 1,150 previously, in line with changes in earnings per share (EPS) forecasts.

The bank’s price target for US-listed Novo shares was also cut from $166 to $159.50.

The adjustments come amid a more conservative outlook on the company’s flagship products, Wegovy and Ozempic, due to slower growth and increased supply.

BofA now expects Novo Nordisk’s third-quarter sales to reach DKK 69.4 billion, marking an 18 percent increase over the previous year, with earnings before interest and taxes (EBIT) expected to be around DKK 33 billion, up 23% from the previous year. . These numbers are slightly below consensus, with Wegovy’s sales projected to be around DKK 16.5 billion, coming in below Visible Alpha’s consensus of around DKK 17 billion.

Ozempic’s forecast sales are DKK 27.1 billion, an increase of 13%, affected by a slowdown in growth and earlier discount adjustments.

BofA analysts also revised their fiscal 2024 EPS estimates down by about 2% due to slower growth at Ozempic and slower supply growth for Wegovy. The EPS forecast for fiscal 2025 was also cut by about 5%, based on extrapolating current trends.

Despite these adjustments, BofA maintains its Buy rating on Novo Nordisk, driven by the strength of the company’s CagriSema Phase III studies and what it considers an attractive valuation.

“The 4Q24 CagriSema PIII data has become a ‘must-have’ for the investment thesis, and investor nerves in this event are likely to drive shares to pay until the outcome of the ‘binary’ data is resolved,” analysts noted.

“Overall, we believe investor sentiment is a repeat of 1H23 in the SELECT data. As in mid-23 for positive SELECT data, we now see excessive share price movement on the CagriSema PIII, with a potential move of c15-20% in extreme scenarios. We also view the valuation as very compelling, with the stock trading back at c26x FY25E PE (price-to-earnings).

Shares in Novo Nordisk were down about 25% from their peak, weighed down by disappointing CB1 trial data and lower trends for Ozempic and Wegovy.

Analysts point to the need for Novo Nordisk to develop a credible oral strategy, especially after weak CB1 data and pending phase III results from competitor Eli Lilly’s (NYSE: ) orforgliprone in the second quarter of 2025.

They also acknowledge that maintaining confidence in a continuous EPS upgrade cycle is challenging given Ozempic’s current slowdown and uncertain supply dynamics for Wegovy.