Novo Nordisk is blessed with an extremely promising growth outlook, according to TD Cowen. The investment bank rates the Danish biopharma stock an outperform, and calls it a best idea for 2024. Shares of Novo Nordisk have rallied 48% so far this year, but analyst Michael Nedelcovych’s latest price target of $115, up from a previous $105, still implies that the stock can rise another 15%. NVO YTD mountain Novo Nordisk YTD chart Novo Nordisk is one of the largest makers of glucagon-like peptide 1 drugs used to treat both diabetes and obesity. Its drugs are currently delivered via weekly injection, with Ozempic reserved as a type 2 diabetes treatment and Wegovy for weight loss. “The company’s merits have been widely recognized, and its shares have outperformed, but we believe there is more gas in the tank,” the TD Cowen analyst wrote. “A rich catalyst path being navigated by one of the most creative, disciplined management teams in the industry should drive share gains in 2024 and beyond.” For one, the analyst expects Novo’s strong revenue and earnings growth to outpace its peers, especially as the company benefits from global GLP-1 supply constraints. Nedelcovych estimates Novo Nordisk’s annual sales and earnings will grow by 9% and 10%, respectively until 2030, above the pharmaceutical industry averages of 4% and 8%. While some investors may be concerned about Novo Nordisk’s ability to match expectations, Nedelcovych believes looming catalysts will justify its valuation – especially since several of these catalysts are still underappreciated. These include the rollout of Wegovy in the European Union, as well as the release of data about Wegovy’s success in preventing type 2 diabetes. Nedelcovych also expects Novo’s once-weekly insulin injection, Icodec, will soon win approval. Testing of an oral pill and anticipated phase III readouts from a new medication (CagriSema for diabetes and obesity) should also boost shares. “We are optimistic for favorable outcomes on all fronts,” the analyst wrote. He also highlighted Novo’s potential gains from other treatments. “Management can be fairly credited with creating an obesity marketplace where previously there was none, and they have now set their sights on NASH [nonalcoholic steatohepatitis] and cardiovascular disease,” Nedelcovych wrote. — CNBC’s Michael Bloom contributed to this report.
