Novo Nordisk’s (NVO) shares fell modestly on Friday after its recent boardroom drama culminated in its top owner securing 90% of shareholder votes to install Lars Rebien Sørensen, an ex-CEO of the Danish pharmaceutical giant, as board chair.
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Sørensen is also the chairman of the Novo Nordisk Foundation, the drugmaker’s majority shareholder with 77% of voting rights. His installation comes less than a month after Helge Lund resigned as the board chair, with six other independent board members following suit.
Lund had clashed with the Novo Nordisk Foundation over the future composition of the company’s board, with the majority shareholder seeking “a more extensive reconfiguration” of the board. According to the Foundation’s proposal from a few weeks ago, Sørensen is expected to chair the board for only two years and will oversee the selection of a new chair to spearhead the drugmaker into the 2030s.
However, a group of key minority shareholders has raised concerns about the Foundation’s increasing control over the company and potential governance risks.
A New Age for Novo Nordisk?
With a new chairman and fairly new chief executive, Mike Doustdar — Doustdar was appointed in July after CEO Lars Fruergaard Jørgensen was ousted about two months earlier — investors will look to the new leadership to steer a strategic turnaround. Sørensen has previously noted that his goal is to support the “transformation plans” of the new CEO to help the company cover lost ground as it contends for higher shares of the obesity market with key U.S.-based rivals such as Eli Lilly (LLY).
The new leadership comes at a time when Novo Nordisk, renowned for its weight-loss drug Wegovy and Type 2 diabetes treatment Ozempic, is seeing a slowdown in sales and profit growth. The Danish company — currently Europe’s most valuable firm — has resorted to reducing its workforce to manage its overhead costs.
Is NVO Stock a Good Buy Now?
On Wall Street, Novo Nordisk’s shares still hold a Moderate Buy rating, TipRanks data shows. This is based on five Buys, two Holds, and one Sell issued by eight analysts over the past three months.
However, at $61.20, the average NVO price target implies more than a 26% upswing potential from the current level.
