NVO Stock Crashes 22% After 2025 View Cut: More Downside Ahead?

Core Insights - Novo Nordisk's shares fell 21.8% after the company revised its 2025 sales and operating profit growth outlook downward, impacting earnings per share [1][9] - The new sales growth forecast is 8-14%, down from 13-21%, and operating profit growth is now projected at 10-16%, reduced from 16-24% [1][9] Sales and Market Dynamics - The guidance cut is attributed to weaker-than-expected momentum in key markets for semaglutide-based drugs, Wegovy and Ozempic, particularly in the U.S. obesity market [2][3] - Ongoing challenges include competition from unsafe compounded GLP-1 drugs and illegal sales of counterfeit semaglutide products, which are affecting Wegovy's market uptake [2] - Despite some growth from NovoCare Pharmacy and telehealth partnerships, overall uptake remains limited, and Ozempic faces increasing competition in the U.S. diabetes market [3] Financial Performance - Preliminary earnings per American Depositary Receipt were reported at 91 cents, missing the Zacks Consensus Estimate of 94 cents, while sales increased by 18% at constant exchange rates [4][9] - Operating profit rose by 40% at constant exchange rates in Q2 2025, primarily due to an impairment charge recognized in the previous year [4] Competitive Landscape - Eli Lilly is a significant competitor in the obesity space, with its drugs Mounjaro and Zepbound generating combined sales of $6.15 billion in Q1 2025, accounting for approximately 48% of Lilly's total revenues [5] - Other companies, such as Viking Therapeutics, are also advancing in the development of GLP-1-based candidates, with ongoing late-stage studies for their investigational obesity drug VK2735 [6] Stock Performance and Valuation - Year-to-date, Novo Nordisk shares have declined by 37.3%, underperforming the industry and the S&P 500, which saw a growth of 0.9% [7][8] - The company's shares are trading at a price/earnings ratio of 12.49, lower than the industry average of 15.11 and significantly below its five-year mean of 29.25 [11] Earnings Estimates - Earnings estimates for 2025 have improved from $3.84 to $3.98 per share over the past 60 days, while 2026 estimates have decreased from $4.64 to $4.56 [15] - The stock's return on equity over the trailing 12 months is 80.95%, outperforming the large drugmaker industry average of 33.55% [19]