Novo Nordisk: Restructuring Sets the Stage for Long-Term Investment in Diabetes and Obesity
Key Morningstar Metrics for Novo Nordisk
Novo Nordisk announced a restructuring plan to be implemented during the third quarter. Management lowered constant currency operating profit growth guidance for 2025 from 10%-16% to a new range of 4%-10%.
Why it matters: Novo Nordisk’s growth has been slowing, due to competition from Eli Lilly as well as continued US sales of unapproved, compounded versions of semaglutide, the active ingredient in Novo Nordisk’s best-selling diabetes and obesity drugs.
- Under the leadership of new CEO Mike Doustdar, Novo Nordisk needs to make sure it can develop and manufacture innovative diabetes and obesity drugs, while also navigating a more complex commercial market in the US.
The bottom line: We’re maintaining our $71 fair value estimates for wide-moat Novo Nordisk after adjusting our cost forecasts. We think the market underappreciates the long-term potential of Novo’s cardiometabolic pipeline, which should be further maximized under this new plan.
- We have included the one-time DKK 9 billion restructuring cost in our third-quarter assumptions. Following a 9,000-person reduction in headcount, we expect Novo to invest savings in continued expansion of its manufacturing capacity and internal and external pipeline opportunities.
- We now assume relatively flat operating profit in 2025 as reported, before Novo resumes double-digit operation profit growth in 2026.
Coming up: Near-term data and approvals are likely to sway Novo’s shares over the next few months.
- We’re awaiting results later this year for semaglutide as a treatment for Alzheimer’s disease, which we see as a higher-risk development program but one that could drive significant sales and fuel further investment in GLP-1 research beyond more traditional cardiometabolic indications.
- We expect Novo to aggressively launch its 25mg oral version of semaglutide in obesity in the US in 2026, which could involve more telehealth collaborations as well as price concessions for direct sales.
Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
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