Novo Nordisk Shares Seen Outpacing Lilly’s After Summer Stumble
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(Bloomberg) -- Novo Nordisk A/S has fallen behind Eli Lilly & Co. this year in the race to be the big stock market winner from obesity drugs. Analysts expect the Danish company to start catching up.
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Less than a year after Eli Lilly began selling Zepbound, sales for its obesity drug are already more than half those of Novo Nordisk’s Wegovy treatment, helping the New York-listed stock jump 54% this year. Meanwhile, Novo Nordisk shares have fallen 25% since reaching a record high in June.
Analysts, though, see bigger gains ahead for Novo, predicting the stock will jump 25% in the next year, based on price targets compiled by Bloomberg, versus 13% for Lilly. The case for Novo: The company is taking steps to ensure it can keep up with booming demand for Wegovy, while at the same time trial results due this year on its next-generation weight-loss drug could spur further gains.
“Given the upcoming data readouts over the next 12 months, we see significant upside potential for Novo to outperform market expectations and regain its leadership in the weight-loss and metabolic drug space,” said Paul Middleton, senior portfolio manager at Mirabaud Asset Management.
The next milestone for both companies is imminent: Lilly reports third-quarter earnings on Wednesday, with Novo Nordisk scheduled for the following week. Investors will be focused on supply and demand dynamics for the blockbuster weight-loss treatments, drug pricing, and any shifts in market share.
Novo Nordisk has garnered much of the attention from investors in recent years, in part because it beat Lilly to market with its weight-loss drug, part of a class medicines known as GLP-1s. Novo won approval from US regulators for Wegovy in June 2021.
The resulting market frenzy fueled a meteoric rise in Novo shares that made the Danish drugmaker Europe’s biggest listed company by market value. Lilly lagged behind, getting the OK to sell the obesity treatment Zepbound in November last year.
Analysts estimate Novo Nordisk’s Wegovy and its sister drug Ozempic — a diabetes treatment that became popular among Hollywood celebrities looking to stay trim — had combined sales of $6.8 billion in the third quarter. Lilly’s Zepbound and diabetes treatment Mounjaro are projected to have generated $5.4 billion in the same period.