Roundup: Gold, STOXX 600 Rally, Novo Nordisk Earnings

Shares of Novo Nordisk (NOVO-B.CO) were higher on Wednesday morning, 7 May, as investors reacted positively to the pharmaceutical firm's reporting higher-than-expected profits in Q1 despite lowering its full-year sales outlook. 

The Euro STOXX 600 index (FXXP) snapped a 10-day winning streak, its longest in nearly four years with a modest loss on Tuesday, 6 May. The downturn in risk sentiment that saw stocks mostly lower helped catalyse a 2.7% jump in the price of gold, which touched a 2-week high. (Source: CNBC)

Novo Nordisk (NVO) Price Performance Chart

Shares of Novo Nordisk have enjoyed some reprieve from selling pressure over the past two weeks but remain close to 2-year lows, and down approximately 50% from the record high of over 1000 DK set in June 2024. The stock remains in a technical downtrend, below both its 200-week and 50-week moving averages. 

*Past performance does not indicate future results 

Novo Nordisk Lowers FY Sales Forecast 

Novo Nordisk reported stronger-than-expected net profits on Wednesday but trimmed its full-year sales growth forecast due to softer demand for its blockbuster weight-loss drug, Wegovy.

The Danish pharmaceutical company reported Q1 net profit of 29.03 billion Danish kroner ($4.4 billion), beating analyst expectations of 27.8 billion. Revenue came in slightly below forecast at 78.09 billion kroner. 

Investors reacted positively in early trading on Wednesday, pushing the stock up close to 3% despite the company lowering its full-year sales growth forecast for 2025 to 13%–21%, down from 16%–24%. The company cited weaker-than-expected uptake of branded GLP-1 treatments due to rising competition from compounded alternatives in the US.

Why Is Novo Nordisk Stock Falling?

Novo is facing growing competition in the weight-loss drug space from the likes of Eli Lilly (LLY), Roche (ROG.VX), AstraZeneca (AZN.L), and AbbVie (ABBV). 

Novo Nordisk’s dramatic share price drop from its June 2024 peak is driven by a combination of three main factors. First, the decline follows a staggering 300% rally over three years that saw the company’s market cap briefly exceed the size of the Danish economy. After such a run, a correction was always more likely.

Second, investor confidence took a hit after disappointing phase 3 data for Novo’s next-generation obesity drug, CagriSema. Originally expected to outperform Eli Lilly’s Zepbound, recent results suggest the drug’s efficacy may be similar, potentially limiting its competitive edge by the time it launches in 2027.

Third, growing policy risks in the U.S. have added further pressure. These include the potential for aggressive Medicare price negotiations on semaglutide-based treatments like Wegovy and Ozempic starting in 2027, and concerns over new tariffs on pharmaceutical imports from Europe, a particular worry for Novo, which manufactures much of its supply in the region. (Source: Morningstar.co.uk)

Euro STOXX 600 Stock Index

The Stoxx 600 closed slightly lower on Tuesday, capping a 10-session winning streak, its longest run of gains since August 2021.

The recent momentum comes on the back of a second monthly loss for the blue chip European stocks index, which ended April down 1.3%. Energy stocks led the retreat as concerns over the global growth outlook dented sentiment around oil demand. Even so, the index has clawed back more than half the ground lost earlier this month, when it dropped nearly 18% from record highs, a recovery helped along by signs of a possible thaw in US trade tensions. (Source: Reuters)

Gold Rebounds

Gold prices jumped to a two-week high on Tuesday, underscored by post-holiday buying from China and geopolitical uncertainty surrounding a possible conflict between Pakistan and India. A fall in US Treasury yields added to gold demand ahead of today’s Federal Reserve interest rate decision.

Conclusion

The positive reaction to earnings will relieve many Novo Nordisk shareholders, but concerns likely remain given the reduced sales guidance and growing competition in the weight loss market. Demand for gold and European shares remains strong despite prices sitting close to a record high, but the landscape could shift quickly with the upcoming Fed meeting and ongoing US trade negotiations.

*Past performance does not indicate future results