The notion of a weight-loss drug has captured the attention of millions and is drawing plenty of favor with investors, who can practically hear cash registers going off in their heads. In fact, Healthcare stock Novo Nordisk (NYSE:NVO) is up over 10% in Thursday afternoon’s trading thanks to new revelations about its latest line of weight-loss drugs.
The latest results are kind of a mixed blessing. On the one hand, there are signs that Novo Nordisk’s Amycretin treatment could actually be the best thing it’s rolled out yet, outperforming even its current superstar treatment, Wegovy. The bad news, of course, is that it’s likely to cannibalize the Wegovy market unless some kind of adjustment is made to make Wegovy more attractive in the face of a superior treatment release, possibly connected to pricing.
At any rate, Amycretin, currently in the midst of Phase 1 testing, is showing weight loss results of around 13% over just 12 weeks. Wegovy, meanwhile, produced just 6%, so the potential here is impressive by any measure.
But Will Insurance Cover It?
The problem with a treatment like this is twofold. First, the costs are likely prohibitive for regular people. Wegovy, without insurance or manufacturer discounts, runs $1,350 for a 28-day supply. That’s more than some people pay in rent or car payments every month. However, Novo Nordisk is already working with Cigna (NYSE:CI) to get better coverage for obesity drugs, and it’s a safe bet other insurers will be left with little choice but to follow suit or risk losing customers.
Is Novo Nordisk a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NVO stock based on five Buys and one Sell assigned in the past three months, as indicated by the graphic below. After a 96.49% rally in its share price over the past year, the average NVO price target of $118.80 per share implies 12.97% downside risk.
