Can Novo Nordisk Regain Ground After Cutting Ties With Hims & Hers?

Core Insights - Novo Nordisk (NVO) has terminated its collaboration with Hims & Hers Health (HIMS) regarding the distribution of its obesity drug Wegovy, citing safety concerns related to compounded versions of the drug and promotional tactics that jeopardize patient safety [1][2][10] - The decision has led to a significant drop in HIMS stock, which fell by 34.6% following the announcement [2] - Novo Nordisk is actively seeking new partnerships with telehealth companies to ensure safe access to Wegovy for patients [6][10] Company Developments - The partnership with HIMS was initially aimed at increasing patient access to Wegovy and expanding Novo Nordisk's market share in the obesity sector [4] - Novo Nordisk's competitive position in the obesity market is challenged by Eli Lilly (LLY), which has seen strong sales from its products Mounjaro and Zepbound [4][5] - The company has faced setbacks in its pipeline, particularly with CagriSema, which showed lower-than-expected weight loss results in late-stage studies [5] Market Impact - The termination of the partnership is expected to temporarily hinder Novo Nordisk's ability to increase Wegovy's market share [6] - CVS Caremark has designated Wegovy as its preferred GLP-1 therapy for weight loss, which may provide Novo Nordisk with a competitive edge over Eli Lilly [7] Competitive Landscape - Other companies, such as Viking Therapeutics (VKTX), are advancing in the obesity treatment space, further intensifying competition [8] - Viking Therapeutics is developing VK2735, which is in phase III studies and aims to offer both oral and subcutaneous formulations for obesity treatment [8] Financial Performance - Year-to-date, Novo Nordisk shares have declined by 18.9%, underperforming the industry average decline of 2.7% [9] - The stock is currently trading above its 50-day moving average but below its 200-day moving average [9] - Novo Nordisk's price/earnings ratio stands at 16.56, higher than the industry average of 14.81, but below its five-year mean of 29.25 [13] Earnings Estimates - Earnings estimates for 2025 have increased from $3.81 to $3.87 per share, while estimates for 2026 have decreased from $4.66 to $4.58 [15] - The trend of estimate revisions shows a mixed outlook, with some estimates increasing and others decreasing over the past 60 days [16]