Investing.com – Novo Nordisk (CSE:NOVOb) remains the “most exciting growth story” in the European pharmaceutical sector and is in pole position to benefit from strong near-term demand for new weight-loss drugs, according to analysts at UBS.
In a note to clients raising their rating of the Danish group’s stock to “buy” from “neutral”, the analysts led by Jo Walton argued that sales of so-called GLP-1 class of medications for weight loss and related conditions will see a “positive inflection” in the first quarter of 2025.
“We expect a pick up in demand […], in-line with seasonal demand for other weight loss products,” the analysts wrote.
Novo has been boosted by soaring sales for its Wegovy offering, which has helped the company carve out a portion of the lucrative market for weight-loss medicines along with Eli Lilly (NYSE:LLY)’s rival treatment Zepbound, also known as Mounjaro. Some analysts have forecast that the market for these drugs could be worth roughly $150 billion globally per year early in the next decade.
Meanwhile, Wegovy’s success turned Novo into Europe’s most valuable firm by market capitalization, valued at one point at more than $460 billion. However, the need to maintain this early advantage in the weight-loss drug market has placed heavy pressure on Novo to roll out next-generation treatments to replace Wegovy.
Shares in Novo slumped in December after trials of Novo’s latest candidate to succeed Wegovy, CagriSema, showed it helped patients reduce their weight by 22.7% — below Novo’s expected target of 25%. Following the announcement, the stock tumbled to its lowest level since August 2023, wiping out as much as $125 billion in value.
Yet the UBS analysts said this sell-off was “overdone”, adding that the stock remains an “attractive entry point into a pure-play for the most attractive growth area in pharma.”
“The CagriSema […] data in obesity was undoubtedly disappointing but it is still a higher efficacy treatment that could still show differentiation in type-2 diabetes […],” the analysts wrote.
