Novo Nordisk Stock Jumped After Earnings — But Its CEO Won’t Give 2027 Guidance. Here’s What Investors Should Know

Novo Nordisk (NVO +5.06%) gave investors a lot of what they wanted on Wednesday. Third-quarter sales rose 4% at constant exchange rates to about $11.9 billion, ahead of Wall Street estimates closer to $11 billion. Sales of obesity drugs jumped 22%. And the company raised its full-year outlook again, now calling for sales growth of anywhere from a 2% decline to a 2% gain. In August, it was expecting a decline of up to 6%.

The stock rose about 5% to more than $42 on Wednesday, but the question investors keep asking, according to one analyst, is about next year, and that’s the one Novo wouldn’t answer.

Image source: Novo Nordisk.

‘Do Your Own Math’

When an analyst at BNP Paribas asked whether Novo could return to sales growth in 2027, Doustdar was direct. “We’re not going to guide,” he said, “but let me go out of my way and provide even more building blocks for next year so maybe you can do your own math.”

There’s an obvious reason for the caution. Chief Financial Officer Karsten Munk Knudsen is leaving after 27 years, and his replacement, Luigi La Corte, is coming over from skin-care company Galderma. Knudsen stays through the end of the year, and Novo plans to give its 2027 forecast with its full-year results in February.

So instead of a number, Doustdar offered three pluses and three minuses. Here’s how they stack up.

What’s Working for Novo

The first plus is the Wegovy pill. Novo says it has passed 8 million U.S. prescriptions since launch, which it calls the strongest U.S. drug launch by volume in more than a decade outside of vaccines. The firm notes that the franchise has a more than 50% share in the U.S. branded obesity market, and Novo plans to have it in more than 20 international markets by the middle of next year, up from seven today.

The second is a Medicare program that started covering weight-loss drugs for seniors in the middle of this year. Since it only counted for half of 2026, it will count for a full year in 2027.

The third is new products. Novo plans to launch CagriSema, its next-generation obesity drug, in the U.S., and a new hemophilia treatment on both sides of the Atlantic, pending approvals.

What’s Working Against It

The minuses are just as concrete. Novo is losing patent protection for semaglutide, the active ingredient in Wegovy and Ozempic, in some international markets, and Doustdar said the hit was larger in the third quarter than in the second. China is already a drag, and it “is not going to go away just because Christmas turns into, again, a new year,” he said. Novo loses exclusivity there next year, too.

The last one is subtler. Novo got a boost this year from favorable pricing adjustments, and Doustdar said investors shouldn’t expect that to repeat to the same degree. Then he added, candidly: “I don’t know that.”

The Part Investors Shouldn’t Skip

Here’s the detail that probably matters most. When an analyst at Jefferies asked whether Novo’s U.S. weight-loss business would have grown at all without the Medicare program, the company’s head of U.S. operations, Jamey Millar, didn’t dodge. Without it, he said, the whole weight-loss drug category looked “relatively flat” from May to October. He added that the pill’s 20% growth from the second quarter was “largely but not exclusively” driven by the program.

That’s a real dependence on a government program. And Millar said employers are still pulling back on covering these drugs because of the cost. “Whether it’s Pepsi, Starbucks, other large employers, when they see the cost trend, they move against” it, he said.

Prices are falling, too. Novo is cutting its U.S. list prices on Jan. 1, and Millar said Ozempic prices are eroding about 10% to 15% a year. Meanwhile, Eli Lilly (LLY +0.59%) is competing hard with its own pill.

So, Should Investors Read Into It?

Put Doustdar’s list together, and you get a company that’s roughly balanced for next year. The good news is real, but the headwinds are just as specific. Novo’s own long-term goal, set in September, is mid-single-digit sales growth through 2030, which is steady but not spectacular for a company that used to be one of the fastest growers among healthcare stocks. Shares are down about 9.5% over the past year, and more than 70% from 2024 highs.

For long-term investors, that’s not necessarily a reason to stay away. Novo is still the volume leader in weight-loss drugs: It generated more than 28 billion Danish kroner (over $4 billion) of free cash flow in the third quarter alone, and the pill is selling. But the refusal to guide is a useful signal, as it could mean that even management isn’t sure 2027 will be a growth year.

If you’re thinking about buying, the February forecast is the moment to watch. A positive number would suggest the pill and the launches can outrun the patent losses. Until then, Novo looks like one of the more interesting turnaround stories among pharmaceutical stocks, albeit perhaps not a finished one.

Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.