By Elsa Ohlen

Amid a flurry of news out of the world's leading weight-loss drugmakers Novo Nordisk and Eli Lilly this week, Berenberg broke with the common Wall Street view that Lilly is the better obesity play.

Novo Nordisk is "no longer the elephant in the room," analysts led by Kerry Holford said as they upgraded the stock to Buy from Hold Tuesday. Following multiple guidance cuts this year, the market has reset expectations for the Danish pharma giant, allowing for a constructive debate on growth, catalysts, and valuation, Holford said.

The analysts see opportunities for new CEO Maziar Mike Doustdar to positively surprise investors, even as some hurdles remain. The launch of a pill form of Novo's blockbuster weight-loss medicine Wegovy could boost confidence in the company, as could a Food and Drug Administration approval for additional indicators for oral and subcutaneous semaglutide -- the active ingredient in Novo's Wegovy, Ozempic, and Rybelsus -- such as fatty liver disease, heart failure, and Alzheimer's disease.

"Novo has fresh ammunition with which to start the fight back versus Lilly's Zepbound," they said, arguing that its pipeline is underappreciated.

CagriSema, Novo's next generation weight-loss drug currently in late-stage trials, could also help level the playing field with Lilly, even as disappointing top-line results of the experimental drug caused the stock to collapse late last year. Since then, shares have fallen another 30%.

The fact that the analysts lowered the price target on Novo's American depositary receipts to $67 from $90 while upgrading the recommendation to Buy, shows just how much investors' optimism around the stock has slipped. Novo's ADRs are down about 55% over the past 12 months, trailing Lilly shares, which have fallen 15% over the same period.

The team shifted preference to Novo at the expense of Lilly -- which the analysts, by contrast, downgraded to Hold from Buy.

While Lilly has delivered spectacular returns over the past five years -- 413% versus peer average of 71%, according to the Berenberg team -- expectations may have become too high. The analysts lowered the price target on Lilly's stock to $830 from $970.

Lilly is widely perceived to have the best-in-class incretin on the market. GLP-1 and GIP are incretins -- a type of gut hormone that helps control blood sugar levels and suppress appetite, helping patients lose unwanted weight.

While physicians tend to favor Lilly's Zepbound over Wegovy, Novo's renewed offensive has started and Zepbound U.S. market share gains have stalled, the analysts noted. Wegovy uptake was helped by a deal with CVS Health that forces patients covered by its pharmacy benefit manager to take Wegovy rather than Zepbound -- a switch that appears to have succeeded without much pushback.

"Now that Novo has additional real-world datapoints and broader label claims for Wegovy...Lilly may need to fight harder to retain its lead," the team wrote.

Lilly, on the other hand, is on track to launch a small molecule oral GLP-1 orforglipron next year, likely soon after Novo's Wegovy pill launch. Initial data on the pill disappointed investors with a 12.4% weight-loss on average over 72 weeks, short of the 15% weight reduction Wegovy delivered in earlier trials.

Early Wednesday, Lilly announced the results of a trial of orforglipron in people with Type 2 diabetes, which showed patients who received the pill saw more weight-loss and a greater reduction in blood sugar than patients on an oral version of Novo's rival drug, Rybelsus.

Not everyone agrees Lilly's dominance is threatened.

"The data strengthens our conviction that Eli Lilly is well positioned to maintain leadership in the GLP-1 market," said Daniel Barasa, PM at Gabelli Funds, arguing that orforglipron offers clear advantages over oral semaglutide -- including that it can be taken at any time of day, with or without food.

Lilly shares rose 1.4% to $774.52 on Wednesday morning, while Novo ADRs were up 2.8% to $58.89.

Write to Elsa Ohlen at elsa.ohlen@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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September 17, 2025 11:26 ET (15:26 GMT)

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