Novo Nordisk (NVO) announced a sweeping restructuring plan that will cut about 9,000 jobs, or 11% of its global workforce, as part of an effort to save 8 billion Danish kroner ($1.25 billion) annually by 2026. The news comes after a 20% share price plunge in July following a profit warning, leaving the stock down about 35% year-to-date as the Danish drugmaker battles slowing Wegovy sales and rising pressure from Eli Lilly (LLY).
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
The move is the first major step by new CEO Mike Doustdar, who took charge in August following a sharp slowdown in Wegovy sales. Doustdar said the plan will simplify the company’s structure, help decisions move faster, and reallocate money toward growth in diabetes and obesity care. Around 5,000 of the job cuts will come in Denmark, where the company is based.
NVO Cuts Guidance Again
Novo said it will face about 8 billion kroner in one-time costs from the plan, with most of the expense coming in the third quarter. Savings of about 1 billion kroner will partly offset these costs in the fourth quarter.
As a result, Novo cut its 2025 profit growth forecast to 4%–10%, down from the earlier range of 10%–16%. This is the second cut in six weeks, adding to concerns about the slowing growth in its obesity business.
Competition from Eli Lilly Adds Pressure
Novo was Europe’s most valuable company last year at about $650 billion, driven by booming sales of Wegovy. But growth has slowed, and U.S. rival Eli Lilly has been gaining ground with its own weight-loss drugs.
Sales in the U.S. have also been hit by compounding pharmacies making copycat versions of Wegovy, which regulators allowed due to shortages. In July, investors cut about $70 billion off Novo’s market value after the company issued a profit warning and named Maziar Mike Doustdar as CEO.
Is NVO Stock a Buy?
The stock of Novo Nordisk has a consensus Moderate Buy rating among eight Wall Street analysts. That rating is based on four Buy and four Hold recommendations issued in the last three months. The average NVO price target of $67.71 implies 24.70% upside from current levels.
