Cut to Grow, Novo Nordisk Announces 11% Global Layoffs, Third Profit Forecast Cut This Year

TradingKey - Obesity drug giant Novo Nordisk (NVO.US) announced on Wednesday a major restructuring plan, including 9,000 global job cuts, and delivered its third downward revision to its full-year profit growth guidance in 2025. However, due to its undervalued stock and hopes for cost savings and efficiency gains, the news did not trigger panic among investors.

On September 10, Danish pharmaceutical leader Novo Nordisk revealed plans to eliminate 9,000 positions worldwide, representing 11% of its 78,400 employees, including 5,000 in Denmark.

The company said it is undergoing a company-wide transformation to simplify its organization, accelerate decision-making, and redirect resources toward growth opportunities in diabetes and obesity.

Novo Nordisk expects the layoffs to incur a one-time cost of 8 billion Danish kroner (approximately $1.26 billion). As a result, its full-year 2025 profit growth forecast — at constant exchange rates — has been revised down from the 10%-16% range provided in August after Q2 earnings to 4%-10%.

This marks the third time this year that the maker of Wegovy and Ozempic has lowered its annual profit outlook. In February, the company had projected 27% profit growth for the year.

The global surge in demand for weight-loss drugs once propelled Novo Nordisk to become Europe’s most valuable company, but amid intensifying competition and shifting macro conditions, its stock has fallen about 38% year-to-date.

In Q2, Novo Nordisk reported 13% revenue growth and 32% net profit growth, both below market expectations. Then-CEO Lars Fruergaard Jørgensen had warned that GLP-1 drug growth would slow in the second half of 2025.

After the unexpected CEO change last month, rumors of upcoming layoffs began circulating. CNBC noted that this restructuring marks current CEO Mike Doustdar’s first major move since taking over.

In a recent statement, Doustdar said:

“Our markets are evolving, particularly in obesity, as it has become more competitive and consumer-driven. Our company must evolve as well. This means instilling an increased performance-based culture, deploying our resources ever more effectively, and prioritising investment where it will have the most impact – behind our leading therapy areas.”

On Wednesday, Novo Nordisk shares rose 0.40% in pre-market trading, showing no signs of panic. Oddo analysts commented that the layoffs demonstrate that the new CEO is taking proactive steps to drive future growth.

Recently, Bernstein upgraded Novo Nordisk’s stock rating from “Market Perform” to “Outperform”, citing strong global demand and rising market penetration for its products.

Bernstein’s latest report stated that financial markets have not fully recognized the real impact of Novo Nordisk’s Ozempic, Wegovy, and other drugs. It also believes the market has underestimated the company’s future profit potential as obesity treatments expand into new indications and insurance reimbursement improves.

Morningstar analyst Karen Andersen said that unless GLP-1 therapy demand slows dramatically — which she considers unlikely — Novo Nordisk will remain well-positioned in the long term, especially as new indications are added to its drugs’ approved uses.

According to TradingKey’s stock scoring tool, Novo Nordisk has a stock score of 5.89, with relatively healthy fundamentals. The company’s P/E ratio has been in a clear undervaluation zone since December 2024. The Wall Street analyst consensus target price is $67.139, implying about 24% upside from current levels.

Novo Nordisk Stock P/E Valuation, Source: TradingKey