Novo Nordisk Smashes Past $500 Billion Value on Wegovy Frenzy

(Bloomberg) — Novo Nordisk A/S became the second-ever European company to pass $500 billion in market value, bolstered by an upbeat outlook for its blockbuster obesity drug.

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Novo crossed the milestone on Wednesday as its shares gained as much as 4.1%, reaching a level only attained by Dior owner LVMH.

The Danish pharma company has roared past the luxury-goods giant, vaulting into the limelight as Wegovy for obesity and a sister medicine for diabetes, Ozempic, proved they could help people shed unwanted weight by curbing their appetite.

The company’s earnings sparked fresh optimism as the drugmaker said revenue could grow by as much as 26% this year and operating profit by up to 29% at constant exchange rates. The guidance looks conservative, according to Bloomberg Intelligence analyst Michael Shah.

The drugmaker has struggled to keep up with demand for both Wegovy and Ozempic, which share the same active ingredient. On Wednesday, it said it has more than doubled the number of Wegovy starter doses it’s shipping to the US, enabling more people to get on the treatment.

The company announced $8.7 billion in investments last year to beef up its manufacturing capacity.

Whether that translates into long-term sales will depend on two factors: competition from Eli Lilly & Co.’s Zepbound, introduced late last year, and how long people are willing to keep taking the medicine.

Novo shares have gained 60% in the past year, fueled by the obesity frenzy. They rose as much as 4.1% in Copenhagen trading Wednesday. The returns contrast with those of Swiss drugmaker Novartis AG, whose stock fell amid concern about its growth prospects.

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Some analysts are skeptical that Novo’s performance can last. The shares are expected to decline around 3% over the next 12 months, according to data compiled by Bloomberg.

“Novo remains our least preferred based on valuation and long-term trends,” Jefferies analyst Peter Welford wrote in a note Wednesday….