Investing.com -- BMO Capital Markets downgraded Novo Nordisk (NYSE:NVO) to “Market Perform” from “Outperform” and cut its price target to $64, saying the Danish drugmaker’s early lead in the obesity drug market is being overtaken by rival Eli Lilly’s rapidly advancing pipeline.

The brokerage said Lilly’s progress with its oral GLP-1 candidate, orforglipron, and increasing prescription strength for its injectable drug tirzepatide suggest it is now pulling ahead in the booming market for incretin-based weight-loss treatments.

While Novo had the head start with semaglutide, BMO analysts believe the first-mover advantage has waned.

BMO says that Lilly’s growing edge in both clinical and commercial fronts is set to intensify with upcoming data from its ACHIEVE-1 trial in Type 2 diabetes.

Novo’s lack of a clear small-molecule strategy beyond peptides in the oral segment is likely to hamper its long-term growth, BMO added.

The firm also flagged continued fallout from last year’s supply disruptions of semaglutide, which may have pushed physicians to favor Lilly’s tirzepatide more permanently.

Novo’s next catalysts, including Alzheimer’s-related trials EVOKE and EVOKE+,  could provide upside, but BMO described them as high risk and unlikely to shift sentiment meaningfully in the near term

The stock is down roughly 34% so far this year despite the soaring demand for its GLP-1-based therapies, Wegovy and Ozempic.

Related articles

Novo Nordisk downgraded by BMO as Eli Lilly gains ground in weight-loss drug race

TSX higher after BoC maintains key rate

RJ downgrades Coty; sees tepid earnings season for beauty and personal care sector