Shares of pharmaceutical giant Novo Nordisk (NYSE:NVO) are under pressure at the time of writing after one of its long-time investors disclosed that it considerably reduced its stake in the company. The investor, Niall Gallagher, a European fund manager who runs GAM Investments, said the investment pullback was driven by the hype around Novo Nordisk’s weight loss drugs.
Bloomberg quoted Gallagher as stating in an interview, “We’ve been bullish on them for quite a while, but now there’s a lot of hype, and it goes beyond just stock markets—you can’t open a Sunday newspaper without reading about the wonder drugs.”
While noting Novo Nordisk’s market dominance of the weight loss segment, Gallagher remarked that pharmaceuticals don’t have perpetual patents, and at some point, the patent runs out. Despite this, Gallagher expressed optimism about the company’s medium- to long-term prospects, saying that “the risk-reward balance has changed, and it’s less favorable, but not negative.”
It bears mentioning that sustained interest in weight-loss drugs is the major catalyst behind Novo Nordisk’s 53% rally this year. Novo has increased its full-year revenue projection three times this year due to the demand for Wegovy and Ozempic.
What is the Projection for NVO Stock?
With two Buys, NVO stock commands a Strong Buy consensus rating on TipRanks. The average Novo Nordisk price target of $110.00 implies 5.75% upside potential from current levels.
