(Bloomberg) -- A long-term Novo Nordisk A/S skeptic recommended buying shares of the Danish weight-loss drug maker nine years after starting coverage of the stock.
Kepler Cheuvreux’s David Evans, who previously described hype around obesity drugs as a “bubble,” said his concerns around competition and pricing are now factored into Novo’s stock price. That’s after it fell by about 50% from last year’s record high.
“This is finally the entry point,” Evans wrote in a note to clients Thursday as he lifted his rating on the Wegovy and Ozempic maker to buy from hold. The shares rose as much as 5.5%.
Evans flagged potential gains of 24% in Novo stock from Wednesday’s close over the next 12 months as he assigned a 630 kroner price target. That remains one of the lowest among firms tracked by Bloomberg, with the average suggesting about 60% upside from 23 buy ratings, nine holds and two sells.
Novo shares have tumbled from their peak amid disappointing trials of the firm’s next-generation weigh-loss shot, CagriSema, as well as broader worries about valuations in an increasingly competitive market.
Even so, the stock has almost tripled in value since Kepler started coverage in July 2016.
“After a few years of us thinking that market optimism on Novo was excessive, we now think the pendulum has swung too far the other way,” said Evans.
--With assistance from Lisa Pham.