Novo Nordisk's (NVO -0.20%) is famous and celebrated for its cutting-edge obesity medication. But on Thursday, its stock felt like the company ingested some of its own treatment. Its U.S.-traded American depositary receipts (ADRs) saw their price slump by more than 2% following the move, a steeper decline than the S&P 500 index's 0.3% slip.
Slimming down
Well before market open that morning, Morgan Stanley's Thibault Boutherin knocked his Novo Nordisk price target down to 600 Danish kroner ($86.67) per share; previously, this number was 700 kroner ($101.11). In doing so, he left his equalweight (i.e., hold) recommendation intact.
According to reports, Boutherin expressed concern in a new research note that the subscriptions for Wegovy are trailing those of its great rival, Zepbound, from American pharmaceutical titan Eli Lilly (LLY -2.03%).
His calculations indicate that Zepbound is taking 59% of overall weekly prescriptions for weigh-loss medication vs. Novo Nordisk taking the remaining 41%. Perhaps more worrying for the European company, the difference between weekly prescriptions for starting doses is starker, with the percentages being 68% to 32% in Eli Lilly's favor.
With this headwind, Boutherin anticipates that Novo Nordisk will cut its full-year 2025 guidance. This might come as soon as its first-quarter earnings release.
The toughest competition possible
Wegovy was not on the market long before Eli Lillly pounced on it with Zepbound. The U.S. company is extremely large and has vast resources, which made it a tough competitor right out of the gate. Meanwhile, other companies large and small are racing to develop their own obesity products, so Novo Nordisk has to step lively to continue succeeding in the segment.
