Novo Cuts Outlook, Pledges Crackdown On Copycat Obesity Drugs

Novo Nordisk shares surged as much as 6.5% in European trading, making it a top performer on the Stoxx 600, as Wall Street analysts said the Danish drugmaker’s guidance cut was largely priced in—and pressures on Wegovy sales from compounded anti-obesity drugs may soon ease. 

Investor sentiment was also buoyed by expectations that Wegovy sales, will rebound in the second half, as the availability of compounded copycat versions declines.

“We have reduced our full-year outlook due to lower-than-planned branded GLP-1 penetration, which is impacted by the rapid expansion of compounding in the U.S. We are actively focused on preventing unlawful and unsafe compounding and on efforts to expand patient access to our GLP-1 treatments,” Novo CEO Lars Fruergaard Jorgensen wrote in a statement. 

Jorgensen told CNBC in an interview earlier, “Compounders took a part of our business away,” adding, “We now expect that compounding will be knocked off, so to say, and we get that business growth going forward.”

For 2025, NOVO forecasted sales growth of 13% to 21% at constant exchange rates, below the February forecast of 16% to 24%. Operating profit growth is expected to be between 16% and 24%, compared with an earlier estimate of 19% to 27%. 

“The updated sales outlook reflects lower-than-planned penetration of branded GLP-1 treatments in the U.S., impacted by compounded GLP-1s. Novo Nordisk is focused on preventing unlawful compounding and further expanding access in the U.S.,”  Novo explained.  

Novo reported better-than-expected net profit results in the first quarter, coming in at 29.03 billion Danish kroner, ahead of the Bloomberg Consensus estimate of 27.91 Danish kroner. 

Sales of Wegovy rose 85% annually at constant exchange rates to 17.36 billion Danish kroner, missing the estimate of 18.98 billion Danish kroner. 

Some on Wall Street suggest the surge in compounded anti-obesity drug availabilities largely drove the guidance cut. Now, with those formulations beginning to exit the U.S. market as Wegovy-related shortages ease, analysts see a potential inflection point for Novo’s sales in the second half. 

Wall Street commentary (courtesy of Bloomberg):

JPMorgan (overweight)

• The cut to guidance has already been priced into the shares, analyst Richard Vosser writes in a note
• Any share-price weakness today would be a buying opportunity “ahead of the potential for improving Wegovy growth as the compounders exit the US market”

UBS (buy)

• The guidance downgrade was “broadly expected by the market,” analyst Jo Walton writes in a note
• UBS estimates for FY sales and Ebit growth are “well within the new range”

Intron Health (sell)

• Even though the outlook has been cut, Intron’s estimates are “unlikely to change” given they were already below guidance, analyst Naresh Chouhan writes in a note
• The price for Ozempic in the U.S. only fell 5% in 1Q, “which helps explain the 3% beat versus consensus”
• Still, it’s unclear whether “that price is better or that there was a one off”

Morgan Stanley (equal weight)

• The new forecast suggests “meaningful uplift of Wegovy volumes” in 2H, analyst Thibault Boutherin writes in a note
• Sees consensus FY Ebit expectations moving by -6% at the mid- point

BMO (market perform)

• The cut to guidance was likely expected by many investors, but could still pressure the shares, analyst Evan David Seigerman writes in a note 
• The obesity care miss and guidance cut overshadowed a relatively in-line topline performance, as well as a bottom line beat, in 1Q

Barclays (overweight)

• The impact of compounding will be in focus on the call, analyst Emily Field writes in a note
• Wegovy pricing and group profitability when it comes to recent telehealth and CVS announcements will also be in focus

Jefferies (underperform)

• The 2025 outlook cut is “slightly greater than expected,” analyst Benjamin Jackson says in a note
• Sees scope for consensus expectations to be downgraded even further on FX

Signs that the compounded drug threat may be easing gave Novo shares a boost, sending them up as much as 6.5% in European trading. The stock is still down 55% from its peak of 1,000 Danish kroner last summer and now trades at 16 times expected earnings—down from 40 times a year ago.

Paging Goldman’s James Quigley (a Novo super bull) … Is it time to buy the dip?