Shares of Novo Nordisk A/S (NVO) plunged 8.08% in pre-market trading on Thursday, as investors reacted to a significant analyst downgrade and news of a competitor's breakthrough in the weight loss medication market.
The steep decline came after BMO Capital downgraded Novo Nordisk from Outperform to Market Perform and drastically cut its price target from $105 to $64. This substantial reduction in outlook has raised concerns about the company's future growth prospects in the highly competitive obesity and diabetes treatment sectors.
Adding to the pressure on Novo Nordisk's stock, rival pharmaceutical company Eli Lilly announced promising results for its experimental weight loss pill, orforglipron. In a late-stage trial, the oral medication achieved an average weight loss of 7.9% and improved blood sugar levels in overweight patients with type 2 diabetes. This development poses a significant threat to Novo Nordisk's market position, as Lilly's pill could potentially compete with Novo's injectable treatments like Ozempic and Wegovy. The news sent Eli Lilly's shares soaring nearly 13% in pre-market trading, further highlighting the shift in investor sentiment within the sector and intensifying competitive pressures on Novo Nordisk.
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