Barclays says buy Novo Nordisk stock 'into this critically important catalyst'

Investing.com -- Barclays analysts are bullish on Novo Nordisk (NYSE:NVO) stock ahead of the December release of pivotal clinical trial data for its next-generation obesity treatment, CagriSema.

The results of the REDEFINE-1 Phase 3 trial could, according to Barclays (LON:BARC), "redefine the obesity landscape" and provide a much-needed boost to the company's stock, which has faced a turbulent second half of 2024.

They explained that CagriSema combines two active ingredients: cagrilintide, an amylin receptor analog, and semaglutide, a GLP-1 receptor analog. This dual mechanism of action aims to create a synergistic effect on weight loss.

Novo Nordisk has set a minimum target of 25% weight loss in the trial, which would make CagriSema the most effective weight-loss drug commercially available.

Barclays is optimistic, stating, "We believe that Novo will hit this bar of 25% weight loss."

The Danish pharmaceutical giant's stock has suffered a 27% decline since June, underperforming the European pharmaceutical index (SXDP) by 24%.

Factors contributing to this slump include "slight misses" in second- and third-quarter results, concerns over Wegovy's prescription growth in the U.S., and broader sector rotation following the U.S. presidential election.

Despite these challenges, Barclays maintains confidence in Novo Nordisk's long-term growth prospects, emphasizing that success with CagriSema could reverse the recent slide in the share price.

Barclays projects a potential 14% upside to its current net present value estimates for Novo Nordisk if the trial achieves its weight-loss target, even accounting for expected gastrointestinal side effects.

The analysts conclude, "We reiterate our Overweight rating into this critically important catalyst."