Shares of Novo Nordisk (NVO -6.05%) fell on Wednesday, down 7.2% as of market close. The drop comes as the S&P 500 (^GSPC -0.37%) and the Nasdaq Composite (^IXIC -0.03%) fell modestly.
The pharmaceutical giant's stock continues to fall after a disappointing earnings release yesterday that included a guidance cut. The news led to downgrades from at least two prominent analysts.
Novo sees sales weaken
Novo's two GLP-1 drugs, Wegovy and Ozempic, have been blockbusters for the company. The success of its weight loss drugs propelled Novo to become the most valuable company in Europe before competition from "compounders" -- companies that market their own tailor-made versions using its active ingredients -- impacted sales, and its stock declined.
The pressure continues, leading Novo to adjust full-year sales targets downward from a range of 13% to 21% to 8% to 14%. It also cut its operating profit targets from between 16% and 24% to between 10% and 16%.
Analysts were not impressed
Novo's leadership, including its new CEO, struck an optimistic tone, believing that compounders don't present a significant threat. Wall Street analysts seemed to disagree, leading Barclays analysts to downgrade the stock to "equal-weight" from "overweight" and Bank of America analysts to downgrade the stock to "neutral" from "buy."
Image source: Getty Images.
While I do agree that Novo's issues are more significant than leadership indicates, I also think Wall Street may be too cautious here for long-term investors. The company's stock is trading at one of its lowest price-to-earnings ratios (P/E) in nearly 30 years and hasn't traded this low since before 2020. This seems like an opportunity to me.
