TD Cowen has reaffirmed its Buy rating and $70.00 price objective on Novo Nordisk (NYSE:NVO) after recent signals from the U.S. Food and Drug Administration that suggest regulators may move to restrict compounding of GLP-1 medications. The analyst note arrives in the wake of a Department of Justice referral and an ensuing decision by HIMS to cease sales of compounded oral semaglutide.
According to TD Cowen, the language used by the FDA indicates the agency could pursue broader regulatory action against unauthorized versions of GLP-1 therapies, but the firm cautions that it is not yet clear how the agency will implement a comprehensive end to compounding practices. TD Cowen consulted a pharmacy law specialist to map potential enforcement avenues open to regulators, but the analyst team concluded that although legal risk is elevated and may deter some compounding activity, the practical route to complete prohibition is not obvious.
TD Cowen characterizes the regulatory developments as positive for Novo Nordisk, which markets branded GLP-1 treatments. At the same time, the firm underscores that uncertainty about enforcement mechanics means the net benefit to Novo Nordisk is still indeterminate until more concrete regulatory steps are announced.
In a separate update on corporate results, Novo Nordisk reported fourth-quarter 2025 earnings that beat consensus estimates. The company recorded adjusted earnings per share of $1.02, compared with the $0.92 that had been forecast. Revenue for the quarter came in at $12.53 billion versus an expected $11.99 billion.
Despite the stronger-than-expected quarter, BMO Capital Markets trimmed its price target on Novo Nordisk to $45.00 from $57.00 and kept a Market Perform rating. BMO cited "a challenging quarter" and "very real headwinds" in the company’s operations as the rationale for the lower target.
Management’s guidance discussion for 2026 highlighted several drivers expected to pressure underlying pricing directionally by 10-15%. The company attributed this anticipated pricing decline to channel mix dynamics, Most Favored Nation pricing, and increased adoption of cash pay. Management nevertheless expressed confidence that volume gains could emerge over time and noted there could be upside should generic entries in certain loss-of-exclusivity markets be delayed.
Following the guidance discussion, BMO reiterated its Market Perform rating and the $45.00 price objective.
The combined set of developments - an apparent regulatory tightening around compounded GLP-1s alongside mixed analyst reactions to the latest financials and guidance - paints a complex picture for Novo Nordisk. While possible enforcement against compounding could reduce unauthorized competition and support branded sales, ambiguity about enforcement timing and methods leaves the magnitude and timing of any benefit uncertain.
Investors and market participants in the healthcare and pharmaceutical sectors will likely monitor further regulatory communications and any enforcement actions closely, as these will clarify whether the current legal and policy signals translate into enforceable barriers to compounding.