• Danish drugmaker is scheduled to release results on Feb. 5

• Amycretin drug results provided some relief after CagriSema

Novo Nordisk A/S investors got a much-needed boost from last week’s trial results for an experimental weight-loss shot. But there’s still a long way to go to claw back the declines of the past six months.

The drugmaker’s shares jumped last Friday after its once-weekly shot of amycretin delivered as much as 22% weight loss in an early trial. That helped soothe investor nerves about Novo’s drug pipeline, but wasn’t enough to reverse recent declines. The stock is down about 40% from a record in June, with a chunk of the drop coming after disappointing results for a separate drug called CagriSema in December.

The experimental CagriSema shot missed Novo’s own expectations for weight loss and performed roughly in-line with Eli Lilly & Co.’s Zepbound, which is already on the market and competes with the Danish drugmaker’s existing treatment, Wegovy. About $93 billion was wiped off Novo’s market value in a single day after the announcement, with several analysts slashing their price targets.

“At the annual results next week, it would be really valuable to understand more on this,” said Paul Middleton, a global equities fund manager at Mirabaud Asset Management, referring to the CagriSema data. “Was it a tolerability issue that stopped people from taking the highest dose, or was there something else?”

Analysts aren’t expecting the earnings, scheduled for Feb. 5, to provide a significant lift to the shares. Eli Lilly has already flagged slower-than-expected demand for its obesity and diabetes drugs in the fourth quarter, and Jefferies analyst Peter Welford sees potential for Novo’s quarterly sales and profits to miss consensus expectations.

For the year, executing on supply for blockbuster drugs Ozempic and Wegovy will be critical, said Welford, who rates the stock underperform. Novo is likely to give a “broad” guidance range for 2025 sales and operating profit when it reports, he added.

Investors have been nervous about the formerly high-flying stock for a while. More bad news followed the CagriSema results, with Novo’s Wegovy being targeted for price cuts by the US government and suffering a setback in a new trial.

Still, market optimism about amycretin suggests the tide may be turning. “This feels like maybe the pain trade with Novo is finally turning a corner,” Barclays Plc analyst Emily Field said. She had previously flagged that an improvement in drug prescriptions, more details on the trial protocol for CagriSema, and progress on developing a viable weight-loss pill as other catalysts that would be needed for a stock turnaround.

The stock’s recent decline has left it trading at about 21 times forward earnings, compared with Eli Lilly at around 35 times. Novo shares are also now about 25% cheaper than their historical average valuation over the past five years. That’s left some in the market willing to look past the recent stock weakness and hold out for longer-term catalysts.

“For the moment we think the stock is too cheap,” Mirabaud’s Middleton said. “Novo Nordisk needs to convince investors that it remains best in class in R&D.”

On the whole, Wall Street also remains positive. Of the 32 analysts tracked by Bloomberg who cover the stock, 22 recommend buying, while the average price target suggests it could rise more than 30% over the next 12 months.

“Let’s not forget that it is still a duopoly industry,” said Tom O’Hara, a European equities portfolio manager at Janus Henderson Investors, referring to Novo Nordisk and Eli Lilly. “Yes there will be new entrants over time, yes generics will come in — in some markets — but right now, it’s a two-horse race.”