Things just keep getting worse for Novo Nordisk. Shares were already battered before the recent profit warning, as US competition in the weight loss market intensified.
The warning wiped another quarter off its rapidly falling market value.
Novo, which reports earnings on Wednesday, has now lost two-thirds of its value in little over a year. Talk of Europe’s first stock market trillionaire is long gone, with Novo’s market capitalisation collapsing to $170 billion (€149 billion).
Novo’s latest troubles stem from copycat compounded versions of its flagship Wegovy drug and stronger rivals from US-based Eli Lilly.
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Lilly’s Mounjaro and Zepbound have gained market share, delivering greater weight loss with reportedly fewer side effects.
As a Barclays analyst put it, it’s been a “slow-moving car crash”. Early supply shortages pushed patients to competitors, while Novo’s cautious marketing lagged behind Lilly’s aggressive, consumer-focused approach.
Despite this, new CEO Maziar Mike Doustdar says the market opportunity and pipeline remain huge.
The stock certainly looks cheap, trading at under 14 times trailing earnings and about 12 times projected earnings. In contrast, Lilly trades at 62 times trailing earnings and 34 times forward earnings.
Still, Novo has looked cheap for a while, but investors who caught the proverbial falling knife have learned an expensive lesson: cheap stocks can stay cheap for a good reason.
