Novo Nordisk (NVO) shares are tumbling on Friday after the Danish pharmaceutical giant posted disappointing headline results from a late-stage cardiovascular clinical trial. In its press release, the company said its experimental anti-inflammatory drug, ziltivekimab, failed to hit its primary endpoint of reducing major adverse cardiovascular events in high-risk patients.
Following today’s decline, Novo Nordisk stock is down more than 10% year-to-date.
Details of Novo Nordisk’s Phase 3 Trial
The ZEUS trial evaluated monthly 15 mg doses of ziltivekimab in over 6,300 participants with atherosclerotic cardiovascular disease, chronic kidney disease, and systemic inflammation.
Although the drug successfully inhibited the IL-6 inflammatory pathway as expected, it failed to lower the rate of heart attacks, strokes, or cardiovascular deaths compared to the placebo.
Investors are treating the outcome as distinctly bearish for NVO shares because ziltivekimab was the company’s primary candidate to diversify its revenue beyond its blockbuster GLP-1 franchise.
In short, this clinical setback weakens Novo Nordisk’s long-term pipeline vision in non-obesity cardiovascular medicine.
Should You Buy the Dip in NVO Shares?
For long-term investors, the selloff may still represent a buying opportunity, given Novo Nordisk shares are holding firm above their 100-day and 200-day moving averages (MAs), indicating the broader uptrend remains intact.
Plus, the company is now trading at a forward price-to-earnings (P/E) multiple of about 15x, which makes it infinitely cheaper to own than its primary GLP-1 rival, Eli Lilly (LLY), which trades at nearly 35x.
That said, caution is still warranted in playing NVO ahead of its Q2 earnings scheduled for release on Aug. 5.
Consensus is for the pharma giant to record $0.81 in earnings per share (EPS), which would represent about a 16.5% decline from $0.97 per share in the second quarter of last year.
What’s the Consensus Rating on Novo Nordisk Stock?
Investors should also note that Wall Street firms also currently favor caution in playing NVO stock even though it currently pays a healthy dividend yield of 3.84% as well.
According to Barchart, the consensus rating on Novo Nordisk sits at “Hold,” with the mean price target of about $47 already in line with its current price.
