Morgan Stanley has cut Novo Nordisk A/S (NYSE:NVO) to Underweight on September 11, 2026. Semaglutide, the underlying molecule for Wegovy and Ozempic, generates roughly 75% of 2026 income. Morgan Stanley fashions that it will still signify 59% of whole gross sales when its patent safety expires in 2031. And according to the firm, the valuation does not price in the affect it has on Novo’s terminal worth. The stock, at the moment trading at 10.6x earnings and down 33% from its 52-week high, slipped another 2% following the call. At this level, the query is not about whether the patent cliff is actual or not, but whether the 10x a number of displays an precise discount.
The Bear Case
Semaglutide loses exclusivity in Europe in 2031 and the US in 2032. And Morgan Stanley believes Novo’s oral-obesity business, projected to attain $10 billion by 2031, could not offset the pricing collapse after the arrival of generics. Growth decelerates to a 4% compound price between 2027 and 2030. If the deceleration continues, it will justify 10x earnings as a truthful price instead of a low-cost one.
But Two Things Cut the Other Way
The 10.6x a number of already costs aggressive pessimism into a market chief of one of the fastest-growing drug courses in historical past. Morgan Stanley fueled the pessimism by discounting a 2031 cliff 5 years earlier. However, pharmaceutical patent expirations steadily face extensions and show troublesome to time. Second, the assumption that oral weight problems therapies can not offset patent losses depends on oral semaglutide being the bridge. But Novo’s next-generation portfolio, including CagriSema and amycretin, gives a important protection against the patent cliff. This stays unproven, however, particularly after CagriSema’s earlier weight-loss information failed to impress, yet Morgan Stanley’s terminal-value model reductions this pipeline nearly solely. The company is also increasing its franchise. On September 7, the STEP Young trial hit its endpoint in kids aged six to twelve, strengthening the base its successors inherit.
Positioning: Contrarians Are Buying
The good money is leaning in. As per the Insider Monkey database, 59 hedge funds held NVO in the second quarter of 2026, up from 55 in the first, indicating a slight increase in the modest institutional curiosity in the stock. Short curiosity on the ADR is negligible at about 0.7%. The positioning displays a beaten-down worth stock quietly seeing institutional accumulation while Wall Street turns more and more bearish.