Morgan Stanley upgraded Novo Nordisk from Underweight to Equal-weight, arguing the recent market sell-off has more appropriately priced the company's intermediate-term risks.
Shares have slid by roughly 40% since late January, with a particularly sharp decline after Novo said last month that sales and profit growth would slow this year, citing an anticipated impact to U.S. sales.
Analyst Thibault Boutherin said the reaction to REDEFINE-4 trial data means the stock now better reflects what he called "the mid-term growth uncertainty and the concentration and loss of exclusivity (LOE) risks on semaglutide." Alongside the upgrade, Boutherin reduced his price target for Novo to 250 Danish crowns, down from 270.
Boutherin pointed to the underwhelming outcomes for CagriSema, Novo’s next-generation obesity and diabetes candidate, as a factor that raises questions about the company’s longer-term positioning. He now projects peak sales for CagriSema of $4.4 billion and describes its likely U.S. role as "complicated positioning of CagriSema on the U.S. market," with potential use primarily among patients who are refractory to Zepbound.
Despite those concerns, the analyst said valuation appears more balanced after the drop. Novo now trades at about 11 times projected 2026 earnings, which Boutherin said "better reflects the concentration risk and patent cliff around semaglutide." Morgan Stanley’s models assume modest medium-term expansion, forecasting roughly 5% sales growth and 4% EBIT growth over the 2026-2029 period, while cautioning that uncertainty remains elevated.
On the positive side, Boutherin highlighted stronger-than-expected prescription momentum for Wegovy Pill in the United States. He noted "very strong Wegovy pill prescription data in the U.S.," with approximately 130,000 weekly scripts in week seven of the product’s launch. In response, Morgan Stanley lifted its Wegovy Pill sales forecasts to $2.0 billion for 2026 and $3.4 billion for 2027.
Nevertheless, the bank underscored lingering downside risks concentrated in the injectable obesity franchise. Boutherin said that 2026 downside risk is focused on U.S. Ozempic and Wegovy injections, where prescription trends have so far lagged initial expectations.
On guidance, Boutherin wrote that Morgan Stanley continues to view Novo’s 2026 guidance as conservative and that the company is more likely to achieve the top end of that guidance; however, he reiterated that U.S. prescription trends for Ozempic and Wegovy injectables have been running below the bank’s initial assumptions.
Looking ahead, Morgan Stanley frames 2026 as a transition year for Novo Nordisk, with intensifying competition and the anticipated second-quarter 2026 launch of Eli Lilly’s orforglipron positioned as an important catalyst for the obesity market and potentially influential for the trajectory of Wegovy Pill.
Contextual note: The bank’s move combines a reappraisal of valuation following the share-price decline with a recalibration of product-level expectations, balancing stronger-than-expected oral obesity prescriptions against durability questions for next-generation drugs and the core injectable franchise.