HSBC Downgrades Novo Nordisk (NVO.US) Rating to "Hold" with 2025 Growth Expectations Cut
We have learned from HSBC that it has downgraded its rating on Novo Nordisk (NVO.US) from "Buy" to "Hold", citing the company's latest warning on its business outlook for 2025. The management of Novo Nordisk indicates that its revenue growth rate may stabilize at a mid-single-digit percentage level in 2025, which is significantly lower than market expectations earlier. This rating change reflects concerns about the company's growth trajectory and core market structure changes, particularly the challenges faced by the GLP-1 drug market, which drives sales for the company.
HSBC analysis notes that illegal sales behavior by US compound manufacturers has continued to exist, exerting pressure on Novo Nordisk's market space. Meanwhile, internal management changes have led to delays in execution efficiency, further eroding market confidence. These factors collectively put short-term profit prospects under pressure.
From the perspective of valuation models, HSBC has downgraded its long-term peak sales expectations for Novo Nordisk's core product and adjusted its earnings forecasts for 2025 and 2026 by 5% and 16%, respectively. Based on more cautious financial predictions, the institution has lowered its target price for Novo Nordisk shares from 680 Danish kroner to 360 Danish kroner, a drop of 47%.
It is worth noting that Novo Nordisk, as a leader in the GLP-1 drug revolution, has expanded treatment options for diabetes and obesity globally through its key component Ozempic and Wegovy. The company was once among the most profitable pharmaceutical companies in the world. However, it recently downgraded its full-year performance expectations: sales growth from 13% to 21% to 8% to 14%, and operating profit growth from 16% to 24% to 10% to 16%. This adjustment has directly impacted stock prices and raised concerns about weakening demand for the "miracle drug".
Meanwhile, the company announced a change in its CEO. The current CEO, Lars Fruergaard Jørgensen, will step down due to "stock price pressure", replaced by Maziar Mike Doustdar, who has over three decades of experience in international operations. This change has sparked divisions among investors: supporters believe that the new CEO possesses deep institutional experience and can stabilize the situation; skeptics argue that Novo Nordisk needs a new face with US market experience to face challenges from competitors like Lilly (LLY.US).