Shares of Novo Nordisk (NVO) are tanking today after the drugmaker warned that its sales are likely to decline this year. This is due to increasing competition and drug-pricing pressures from the U.S. government. More precisely, the company said that revenue, measured at constant exchange rates, could fall between 5% and 13%. That outlook was weaker than analysts expected, as forecasts had pointed to only a modest decline.
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It’s worth noting that Novo shared the guidance ahead of its full earnings release that’s scheduled for Wednesday. Importantly, this would also be Novo Nordisk’s first annual sales drop since 2017, when a price war in the U.S. insulin market weighed on results. However, this time, the pressure is coming from multiple directions.
In the U.S., competition for weight-loss and diabetes treatments has heated up, while government efforts to lower drug prices are also starting to have a real financial impact. Meanwhile, generic versions of Ozempic are expected to begin appearing in international markets later this year. Together, these factors are creating a more challenging environment than investors had anticipated.
Is NVO Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NVO stock based on four Buys, three Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVO price target of $57 per share implies 11.8% upside potential.
