HSBC Downgrades Novo Nordisk to Hold from Buy, No Other Updates

HSBC Downgrades Novo Nordisk to Hold from Buy, No Other Updates

HSBC downgraded Novo Nordisk (NYSE:NVO) to Hold from Buy on July 29, 2025, slashing its price target to DKK360.00 from DKK680.00. The decision followed Novo Nordisk's reduction of its 2025 operating profit guidance by approximately 7%, with the mid-point of the new guidance range suggesting a mid-single digit exit growth rate for 2025 [1].

The downgrade is attributed to several factors, including the continued illegal selling of weight loss drugs by U.S. compounders despite FDA bans. This has prevented Novo Nordisk from regaining expected market share in the GLP-1 drug market [1]. 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 [1].

HSBC acknowledged that its 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 [1]. 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.investing.com/news/analyst-ratings/hsbc-downgrades-novo-nordisk-stock-to-hold-amid-compounding-concerns-93CH-4162145
[2] https://seekingalpha.com/news/4475685-novo-nordisk-downgraded-to-hold-at-hsbc-on-guidance-cut