Novo Nordisk trial ‘own goal’ sparks flurry of analyst downgrades

Published Tue, Feb 24 20267:53 AM EST

Key Points

At least seven analysts cut their price targets on Novo Nordisk after disappointing results for its next-generation weight loss drug, CagriSema.
Confidence in the stock is now severely dented, and investors are doubting the medicine's commercial potential.
It comes less than a month after the company predicted sales and profits would decline between 5% and 13% in 2026, and shares are down 60% over the past 12 months.

Analysts added to the sour mood around Novo Nordisk , racing to cut price targets on the stock, after the Danish drugmaker published disappointing trial results on what it hoped to be its next big weight loss drug. The drug, CagriSema didn't meet the key goal of matching rival medicine Zepbound, developed by Eli Lilly , and the stock fell over 16% on Monday to a four-year low. Confidence in the stock is at rock bottom, and entering a period without any obvious price triggers, said Jyske Bank analyst Henrik Hallengreen Laustsen after the latest CagriSema trial results, which he referred to as a "gigantic own goal by Novo." It indicates that CagriSema isn't on par with Zepbound, and with a more complicated product design, it weakens the case for CagriSema as a successor to Wegovy, Laustsen added as the bank downgraded shares to Hold from Buy. "CagriSema is not dead, but the product does not live up to the potential that neither we nor the market had hoped for." Novo's Copenhagen-listed stock was down another 3% in trading on Tuesday, bringing losses over the past 12 months to 60%. Price targets come down At least seven analysts lowered their price target on Novo Nordisk following Monday's news. Deutsche Bank's Emmanuel Papadakis cut his recommendation on Novo to Hold, alongside slashing his price target to 275 Danish kroner from 400 kroner. The latest blow to Novo comes less than a month after the company predicted sales and profits would decline between 5% and 13% in 2026 , an outlook far worse than the market had expected, leading to shares taking another dive. Sitting through a year of double-digit sales declines might be tolerable if there were some supportive near-term dynamics, including continued momentum for the Wegovy pill, as well as better medium-term prospects, such as a competitive CagriSema launch addressing market share pressure, said Papadakis. "Unfortunately a miss [Monday] for REDEFINE4 disproves our optimism CagriSema could do much better and blows a sizeable hole in that thesis," he said, referring to the study. Read more Novo Nordisk faces a defining year in the obesity drug market. It’s off to a dramatic start Eli Lilly's GLP-1 growth is only getting started as Novo Nordisk braces for a decline in 2026 Novo Nordisk says it will take legal action after Hims & Hers reveals $49 copy of Wegovy pill Novo Nordisk shares tumble after company warns of sales hit this year Much of the price target cuts stems from lower estimates of future CagriSema sales, and the doubt in its commercial potential and positioning versus rival treatments. Barclays analyst James Gordon cut his peak sales estimate for the drug to $2 billion from $12 billion, or by more than 80%, saying Monday's news was a "worst-case scenario." Novo's optimism While the market has lost confidence in CagriSema, Novo says it still sees the drug's potential. "In this space of an open-label trial, we are really, really satisfied with the 23% weight loss, and maybe a little bit surprised by the 25% weight loss that we saw within market drug," Chief Scientific Officer Martin Holst Lange told CNBC's Charlotte Reed. The latest trial results for CagriSema were from a so-called open-label trial, meaning participants knew what treatment they were receiving. Such a design comes with a risk of bias in favor of a well-known product. In the study, participants taking CagriSema achieved a weight loss of 23% after 84 weeks compared to 25.5% with of tirzepatide, also known as Zepbound. "When the study was initiated three, four years ago, it was not possible, for technical reasons, to blind the study. We therefore decided to do the open-label version," said Lange, adding that "that's not optimal." Monday's results showed a similar efficacy of CagriSema as in previous studies. In December 2024, shares also tanked after the results of the first CagriSema results were published. At the time, efficacy was reported of 22.7%, below the 25% Novo had targeted. The news also comes as Novo is already under pressure from lower U.S. prices and continued market share loss to Eli Lilly and its rival medicines. NVO 5Y line Novo Nordisk ADR's are at a four-year low "The firm needs its pipeline to produce differentiated therapies that can help extend its position in the market," noted Morningstar analyst Karen Andersen. Andersen, who had expected CagriSema to achieve non-inferiority to tirzepatide, still assumes CagriSema will reach the market, but the failure of this latest study "is likely to affect physician and patient perception of the drug, adding to launch headwinds." She lowered her price target on the stock to 343 kroner from 372 kroner, as well as her CagriSema sales forecast to $8 billion from $13 billion. Even so, Andersen says the market is undervaluing Novo's long-term competitiveness in the GLP-1 market. "Near-term catalysts look limited, but include oral semaglutide's US launch trajectory and potential midstage pipeline progress or acquisitions," she said. Early Tuesday, Novo said another of its experimental drug candidates, UBT251, delivered up to 19.7% weight loss over 24 weeks , in a mid-stage trial conducted in China. The medicine, which targets three different hormones affecting appetite, is being jointly developed by Novo and Chinese firm United Laboratories . Novo will conduct a global trial with UBT251 with results out next year, it said. The news did little to help the struggling Novo stock.