Novo Nordisk's London Reset: Morgan Stanley Turns Bearish as Buybacks and Paediatric Data Offer Little Solace

Morgan Stanley downgrades Novo Nordisk to Underweight, slashing its target to DKK 250 on semaglutide patent expiry worries; shares fall 2.8%.

Morgan Stanley has stripped Novo Nordisk of its neutral rating, cutting the Danish drugmaker to "Underweight" from "Equal-weight" and slashing its price target to 250 Danish kroner. The downgrade landed squarely on the shares, which fell 2.8% to EUR 37.03.

At the heart of the broker's caution is the looming patent expiry on semaglutide, the active ingredient behind Ozempic and Wegovy. Morgan Stanley reckons the drug accounts for roughly 75% of anticipated 2026 revenue — and its patent protection lapses in the first half of the 2030s. The medium-term growth picture looks similarly thin: the bank models just 2% to 3% growth in both sales and operating profit for 2027, followed by an annual growth rate of 4% between 2027 and 2030. By comparison, Morgan Stanley expects the wider European pharma sector to deliver 4% revenue growth and 7% earnings growth over the same stretch.

Competitive pressure from Eli Lilly adds another layer of concern. Novo Nordisk's oral obesity franchise is projected to reach USD 10 billion by 2031, but that, in Morgan Stanley's view, will not be enough to offset the semaglutide decline. The broker also sees a dearth of near-term catalysts ahead of the company's capital markets day in London on 21 September, where management intends to lay out strategy, the research pipeline and operational progress.

A Week of Setbacks Leaves the Chart Bruised

The stock has been under sustained pressure. Wednesday's early halt of Phase 3 trials involving ziltivekimab dented sentiment further, and the shares have shed 3.4% since. Over a week the decline reaches 7.7%, over a month 8.0%. Year-to-date the stock is down 16%, and against levels of roughly twelve months ago it has lost 20%.

Momentum indicators sketch a similarly weak picture. A 14-day RSI of 34.0 edges the stock toward oversold territory without formally entering it. At EUR 37.03, the shares sit 33% below their 52-week high of EUR 54.86 set on 23 January, while remaining 22% above the EUR 30.25 low touched on 2 March. The price is trading well beneath its 50-day moving average of EUR 41.20 and below longer-term trend lines around EUR 40.

Not every analyst shares Morgan Stanley's gloom. HSBC recently lifted its target to 320 Danish kroner while keeping a "Hold" rating. The broader consensus now sits near 309.7 Danish kroner, underpinned by mostly neutral-to-positive recommendations — a spread that lays bare the market's disagreement over whether semaglutide-era growth worries are already priced in or whether further downside lies ahead.

Ziltivekimab's Second Failure Narrows the Pipeline

The London gathering arrives against a mixed news backdrop. Last Wednesday Novo Nordisk halted the HERMES and ATHENA Phase 3 trials of ziltivekimab in the cardiovascular indication after an independent monitoring committee judged success unlikely. It marks the second blow for the compound: the ZEUS study had already failed to show that ziltivekimab reduced the risk of major cardiovascular events in patients with atherosclerosis, chronic kidney disease and elevated inflammatory markers. Only the ARTEMIS trial remains, testing the drug as an acute treatment following heart attack, with results not expected until the first half of 2027.

Offsetting that disappointment, the STEP-Young study met its primary endpoint. In children aged six to under twelve, weekly semaglutide produced a marked reduction in body mass index. After 68 weeks, 40.4% of treated children were no longer classified as obese, against zero percent in the placebo group. The safety profile matched earlier trials in children and adults, with no new concerns regarding growth or pubertal development.

Buyback Programme Presses On Despite the Selloff

Alongside the clinical updates, Novo Nordisk is keeping its repurchase programme running. As of 4 September, the company had bought back 32,034,179 B shares within the current tranche at an average price of 281.63 Danish kroner, equivalent to outlays of about DKK 9.02 billion. That tranche runs until 1 February 2027 and is capped at just over DKK 11.2 billion, part of an overall programme of up to DKK 15 billion launched in February 2026. Novo Nordisk now holds 46,074,876 B shares as treasury stock, equal to 1% of its share capital.

Management's decision to press ahead with buybacks despite the share price slide signals confidence in the company's long-term valuation — particularly with the stock's RSI at 35.7, deep in oversold territory. Whether that signal is enough to restore investor trust will only become clear at the capital markets day, where the company is due to unveil new strategic ambitions to replace its previous targets. For shareholders, it is the first chance in months to hear directly from the top how the ailing pharma giant intends to move forward — and whether paediatric obesity wins can outweigh doubts about the rest of the pipeline.