The Danish maker of blockbuster drug Wegovy has had a miserable year with stalling sales growth, profit warnings and a $400 billion share price plunge, but the company hit the right notes at a diabetes conference in Vienna this week, despite not unveiling any breakthrough clinical data.
The company's shares rose more than 6% on Thursday, taking the stock up more than a third since a low in early August, shortly before new CEO Mike Doustdar took over and ushered in a restructuring plan to streamline and focus the business.
The drugmaker is starting to win investors back to its rapid weight loss growth story that drove its heady rise to become Europe's most valuable company last year, and to claw back lost ground to rival Eli Lilly.
Last week, Doustdar announced a sweeping restructuring plan to cut 9,000 jobs, a bold early move that analysts saw as a sign he is serious about sharpening execution and cutting costs.
"That's an easy move to make out of the gate, but it's also unusual at Novo, and it's piqued investor interest," said Berenberg analyst Kerry Holford, who upgraded her Novo rating from "hold" to "buy" on Wednesday.
"There's a sense of realignment happening."
Shares of smaller Danish drugmaker Zealand Pharma, which also focuses on diabetes and obesity, climbed 8% on Thursday, buoyed by Novo's rise. Eli Lilly was up around 0.5%.
A LOT TO PROVE BUT STILL IN THE RACE
At the European Association for the Study of Diabetes in Vienna, Novo's branding was splashed boldly across the conference venue. The company was promoting new research into semaglutide, the active ingredient in diabetes medicine Ozempic and obesity medicine Wegovy, for a range of related health conditions.
Some investors said Novo appeared more energised and engaged than it had in some time - projecting renewed confidence as it looks to reclaim ground lost.
"We're seeing the beginning of a potential fight-back with Wegovy," added Holford. "Investors fell out of love with it, and the company still has a lot to prove. But they're still in the race."
MOOD SLOWLY TURNING
Investors want proof that the company is improving its commercial execution in the United States, where Lilly has been faster and more aggressive amid the rise of compounded copycat versions of GLP-1 drugs and surging consumer demand.
Novo's chief scientific officer Martin Holst Lange told investors in Vienna the company was looking to become more nimble.
"We're making faster decisions, progressing faster in terms of not only our research but also our clinical pipeline and obviously having the new organisation in place already," he said.
Barclays noted that while there was no "groundbreaking" data from Novo presented in Vienna, the company received a generally positive reception, especially around its restructuring plans.
"Collectively, these moves suggest Novo is positioning itself to sharpen execution and more effectively compete with Eli Lilly," it said.
Analysts at Baader said that the steep share price slide since mid-2024 looked "overdone" and was an opportunity for contrarian investors. Swift moves by management should stem market share erosion and turn around the group's prospects.
"The sentiment around the stock has gone from being very negative," Jyske Bank analyst Henrik Hallengreen Laustsen told Reuters. "It may well be that we are starting to see that the mood has slowly started to turn."
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The company's shares rose more than 6% on Thursday, taking the stock up more than a third since a low in early August, shortly before new CEO Mike Doustdar took over and ushered in a restructuring plan to streamline and focus the business.
The drugmaker is starting to win investors back to its rapid weight loss growth story that drove its heady rise to become Europe's most valuable company last year, and to claw back lost ground to rival Eli Lilly.
Last week, Doustdar announced a sweeping restructuring plan to cut 9,000 jobs, a bold early move that analysts saw as a sign he is serious about sharpening execution and cutting costs.
"That's an easy move to make out of the gate, but it's also unusual at Novo, and it's piqued investor interest," said Berenberg analyst Kerry Holford, who upgraded her Novo rating from "hold" to "buy" on Wednesday.
"There's a sense of realignment happening."
Shares of smaller Danish drugmaker Zealand Pharma, which also focuses on diabetes and obesity, climbed 8% on Thursday, buoyed by Novo's rise. Eli Lilly was up around 0.5%.
A LOT TO PROVE BUT STILL IN THE RACE
At the European Association for the Study of Diabetes in Vienna, Novo's branding was splashed boldly across the conference venue. The company was promoting new research into semaglutide, the active ingredient in diabetes medicine Ozempic and obesity medicine Wegovy, for a range of related health conditions.
Some investors said Novo appeared more energised and engaged than it had in some time - projecting renewed confidence as it looks to reclaim ground lost.
"We're seeing the beginning of a potential fight-back with Wegovy," added Holford. "Investors fell out of love with it, and the company still has a lot to prove. But they're still in the race."
MOOD SLOWLY TURNING
Investors want proof that the company is improving its commercial execution in the United States, where Lilly has been faster and more aggressive amid the rise of compounded copycat versions of GLP-1 drugs and surging consumer demand.
Novo's chief scientific officer Martin Holst Lange told investors in Vienna the company was looking to become more nimble.
"We're making faster decisions, progressing faster in terms of not only our research but also our clinical pipeline and obviously having the new organisation in place already," he said.
Barclays noted that while there was no "groundbreaking" data from Novo presented in Vienna, the company received a generally positive reception, especially around its restructuring plans.
"Collectively, these moves suggest Novo is positioning itself to sharpen execution and more effectively compete with Eli Lilly," it said.
Analysts at Baader said that the steep share price slide since mid-2024 looked "overdone" and was an opportunity for contrarian investors. Swift moves by management should stem market share erosion and turn around the group's prospects.
"The sentiment around the stock has gone from being very negative," Jyske Bank analyst Henrik Hallengreen Laustsen told Reuters. "It may well be that we are starting to see that the mood has slowly started to turn."
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