Novo Nordisk Downgraded to Hold by HSBC Amid Concerns Over Growth Trajectory

Novo Nordisk was downgraded to Hold from Buy at HSBC due to the company's warning that its 2025 exit growth rate will likely settle into mid-single digits. The adjustment reflects concerns over Novo Nordisk's growth trajectory and structural challenges.

Novo Nordisk, a leading global healthcare company, has been downgraded to Hold from Buy by HSBC, reflecting mounting concerns over the company's growth trajectory and structural challenges. The downgrade comes following Novo Nordisk's recent warning that its 2025 exit growth rate is expected to settle into mid-single digits [1].

The downgrade is attributed to several factors, including the continued illegal selling of weight loss drugs by U.S. compounders despite FDA bans, which has prevented Novo Nordisk from regaining expected market share in the GLP-1 drug market [2]. Additionally, HSBC raised concerns about the overestimation of the GLP-1 market size and questioned the safety of medium-term pricing assumptions given capacity investments in the space [2].

HSBC acknowledged that their previous Buy rating was incorrect, noting that their assumption about the FDA ban on compounding allowing Novo Nordisk to regain market share has not materialized [2]. The research firm also highlighted internal management changes and execution delays as factors contributing to the reduced confidence in Novo Nordisk's short-term earnings outlook [2].

The downgrade reflects a broader trend of concern over Novo Nordisk's growth trajectory and structural weaknesses in the GLP-1 market, which underpins much of the company's sales momentum [2]. Earnings for 2025 and 2026 have been revised downward by 5% and 16%, respectively, with HSBC lowering its target price from DKK680 to DKK360 [2].

References:
[1] https://www.novonordisk.com/content/nncorp/global/en/news-and-media/news-and-ir-materials/news-details.html?id=916407
[2] https://seekingalpha.com/news/4475685-novo-nordisk-downgraded-to-hold-at-hsbc-on-guidance-cut