Novo Nordisk in headwind: Why investors are turning their backs on the pharmaceutical giant

The manufacturer of weight loss syringes and world market leader for insulin products is looking far into the future. But that's not enough for investors. A big competitor does it better.

Dusseldorf. Perhaps no European stock was discussed as much last week as Novo Nordisk. At least that's what relevant international digital stock forums signal. The trigger was the company's eagerly awaited capital markets day last Monday in London.

The Danish pharmaceutical company announced there that it wanted to bring more than five new blockbusters onto the market by 2030. These are particularly high-selling drugs. By 2035, Novo Nordisk expects revenue of more than 20 billion euros.

Research data on Cagri-Sema generated a lot of attention. This is a new way to lose weight. The weight loss is said to be greater than with previous medications. The US approval decision is expected in the fourth quarter of this year.

Novo Nordisk also wants to develop additional growth areas such as cardiovascular diseases, liver diseases and blood diseases. But all of these are “just” ambitions, not concrete financial forecasts.

This is probably why the share lost another ten percent of its value in the past week. Investors had wanted more details and sales forecasts instead of long-term ambitions. Some analyst firms, including Jefferies and Deutsche Bank, have subsequently lowered their price targets.

Since the record high in the summer of 2024, the shares of what was once the most valuable European company have collapsed by 75 percent. Novo Nordisk is the world market leader for insulin products with a share of around 50 percent and is facing tough competition and price pressure after a share price boom that developed around the group's weight loss injections.

The most successful competitor is Eli Lilly. The American pharmaceutical company has succeeded in marketing more effective weight loss injections, some of which can be purchased more cheaply in the important US market. The share price has increased fivefold in the past five years.

Both stocks are equally valued at their respective 20-year average with a price-earnings ratio (P/E) of just under 22. But currently the valuations are far apart: the Novo Nordisk share has a P/E ratio of just 11.8. Meanwhile, Eli Lilly is valued more than twice as high, with a P/E ratio of 26.3.

One reason for the big difference is the much faster increase in profits. As a result, Eli Lilly successfully grows into its high valuation and thus reduces it. This year, Eli Lilly's earnings per share are expected to increase by a good 50 percent compared to the previous year. Analysts predict an increase of another 30 percent for 2027.

For Novo Nordisk, on the other hand, there are signs of a profit loss of around five percent in 2026; for 2027, the experts expect a minimal increase of one percent. This is disappointing for a global market leader in the pharmaceutical industry that has grown rapidly for decades.

Analysts remain skeptical about the Danes even after the share price collapse. There are nine buy recommendations, 22 hold recommendations and five sell ratings. Things are looking much better for Eli Lilly with 30 buy and four hold recommendations with only one sell rating.