Novo Nordisk Faces a Reckoning in London as Analysts Split on the Road Ahead

Morgan Stanley downgraded Novo Nordisk to Underweight, citing semaglutide's patent cliff; shares fell 2.8% in Copenhagen as HSBC raised its target.

Morgan Stanley pulled the rug out from under Novo Nordisk on Monday, cutting its rating on the Danish drugmaker to Underweight from Equal-weight. The investment bank pointed to a lacklustre medium-term growth outlook and mounting concern over the approaching loss of patent protection for semaglutide — the molecule behind Ozempic and Wegovy.

The market wasted little time reacting. In Copenhagen, the shares shed 2.8% to trade at DKK 278.2, while German-listed stock changed hands at EUR 36.89, down 3.1% from the previous close. The downgrade capped what has been a bruising stretch for the company, which has now surrendered roughly 3.8% since last Wednesday alone.

That midweek slump followed Novo Nordisk's decision to halt two late-stage trials of ziltivekimab, its anti-inflammatory candidate. The move prompted Oppenheimer analysts to question whether IL-6 can function as a viable cardiovascular target at all. Separately, the stock has given up 8.0% since the German launch of the Wegovy pill about a week ago.

Not everyone on the sell side shares Morgan Stanley's gloom. HSBC lifted its price target on the same day, raising it to DKK 320 from DKK 300, though it kept its Hold rating intact. The divergent calls lay bare just how sharply analysts disagree on the company's trajectory — some fixate on the structural threat posed by patent expiry, others give credit for operational wins.

A Pipeline That Giveth and Taketh Away

The retreat from ziltivekimab stings more than the headlines suggest. Novo Nordisk had banked on the IL-6 inhibitor as a potential growth engine beyond its core diabetes and obesity franchise. With that candidate now largely written off, investor attention narrows further onto semaglutide — precisely the asset Morgan Stanley flags as facing a medium-term patent cliff.

The full picture of the setback is now clear. Last Wednesday, the company stopped both the HERMES and ATHENA Phase 3 trials of ziltivekimab in cardiovascular disease after an independent monitoring committee concluded success was unlikely. It marks the second blow for the drug: the ZEUS study had already failed to show that ziltivekimab could reduce the risk of major cardiovascular events in patients with atherosclerosis, chronic kidney disease and elevated inflammatory markers. Only the ARTEMIS trial remains, testing the compound as an acute treatment following heart attack, with data not expected until the first half of 2027.

Against that backdrop, the obesity pipeline offered a rare bright spot. The Phase 3 STEP-Young study met its primary endpoint: weekly semaglutide significantly reduced body-mass index in children aged six to under twelve. After 68 weeks, 40.4% of treated children were no longer classified as obese, compared with zero percent in the placebo arm. The safety profile matched that of earlier trials in children and adults, with no new concerns raised around growth or pubertal development.

Those results bolster the case that semaglutide has room to run beyond its existing indications. They were not, however, enough to stem the selling.

Buybacks Press On, and All Eyes Turn to September 21

Even with the news flow working against it, Novo Nordisk has kept its repurchase machine running. As of September 4, the company had bought back 32,034,179 B-shares at an average price of DKK 281.63, for a total outlay of roughly DKK 9.02 billion. The current tranche runs until February 1, 2027, and is capped at just over DKK 11.2 billion, sitting within an overall programme of up to DKK 15 billion that kicked off in February 2026. Novo Nordisk now holds 46,074,876 B-shares in treasury, equal to one percent of its share capital.

The stock's technical picture adds another layer: with a relative strength index of 35.7, the shares sit in oversold territory. Whether that signal is enough to lure buyers back may hinge on the capital markets day scheduled for September 21 in London, where management is expected to lay out strategy, pipeline and operating performance — and, according to the company, unveil fresh strategic ambitions to replace its existing targets.

For investors, it will be the first clear opportunity in months to hear from the top how the group intends to navigate its troubles. The shares currently trade at EUR 37.46, some 32% below their 52-week high of EUR 54.86 reached in January — a decline that speaks to how deeply pipeline setbacks have eroded confidence.

Management will also likely be pressed on its full-year 2026 guidance, which in August pointed to adjusted sales and operating profit growth of between 0% and minus 6% at constant exchange rates. Until then, the stock looks set to remain at the mercy of clashing analyst verdicts.