Here’s Why Novo Nordisk Hit A New 52-Week Low On Friday
It’s not uncommon for a stock to lose more than 10 percent of its entire value in one single day although it is often limited to small and nano-cap stocks. As such, it is unusual and certainly newsworthy when a mega-cap stock loses more than 10 percent in one day and hits a 52-week low.
Novo Nordisk, (NYSE: NVO) is a $72 billion healthcare company that creates pharmaceutical products for the treatment of diabetes and obesity. On Friday shares plummeted more than 13 percent and hit a new 52-week low of $34.55 after the company pulled off a slight beat in its third quarter earnings report but shocked investors with a warning for its full fiscal year.
The Danish-based company cautioned investors in its earnings report that the market environment in the U.S. has become “significantly more challenging” and has negatively impacted the company’s ability to raise prices for its products. As such, the company now expects its 2017 to be characterized by a low single-digit growth in sales and flat to low-single digit growth in operating profit.
In addition, Novo Nordisk said that it no longer believes that it can achieve its operating profit growth of 10 percent which was communicated to investors back in February. Instead, the company is now targeting an average operating growth of just five percent.
Lars Rebien Sørensen, president and CEO: “We have reassessed our long-term target for operating profit growth and our R&D strategy in the light of the challenging market environment in the USA. As a result, we are reducing our global cost base and parting company with some of our valued employees. Going forward we are confident that our strong product portfolio with innovative products like Tresiba®, Victoza® and semaglutide will enable us to deliver on our revised growth targets.”
Novo Nordisk’s warning has created a shockwave across some of its peers. Shares of MannKind, (NASDAQ: MNKD) a biopharmaceutical company that also treats adults suffering from type I and type II diabetes, fell more than seven percent.
Other losers in the sector include Aradigm (NASDAQ: ARDM (-4.16 percent), Eli Lilly (NYSE: LLY) (down 2.14 percent), Catalent (NASDAQ: CTLT) (down 1.96 percent).