Why Novo Nordisk Stock Sank by Nearly 4% Today

Novo Nordisk (NYSE: NVO) stock had a Monday to forget, as news from a top rival dampened sentiment on the Danish pharmaceutical company. A price target cut from an analyst tracking the company only exacerbated the situation. By market close that day, Novo Nordisk's shares were down by 3.5%, in contrast to the generally buoyant S&P 500 (SNPINDEX: ^GSPC), which edged almost 1% higher.

A rival makes a move

That rival is none other than giant U.S. pharmaceutical company Eli Lilly. It announced that it will make the highest dosages of its Zepbound weight-loss drug available to any adult with a qualifying prescription via its website beginning in August.

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Zepbound, a direct competitor to Novo Nordisk's pioneering Wegovy, is already available on Lilly's website, albeit in lower doses.

With the addition of the two highest-dose versions, all dosages of the drug will be offered through the company's portal. With this, Eli Lilly has a fine chance of poaching more market share from the European company.

Price target cut

Meanwhile, well before the market open, J.P. Morgan prognosticator Richard Vosser cut his price target on the company. He now feels its Denmark-listed stock is worth 650 kroner ($101) these days, down significantly from his previous fair-value assessment of 1,000 kroner ($155). He maintained his overweight (i.e., buy) recommendation, however.

Neither of these developments is positive for Novo Nordisk. However, investors didn't react by panic-selling the stock; instead, it suffered only a minor sell-off. This is telling; Wegovy is still a hotly popular drug and should remain so, given the high levels of obesity in this country, and Americans' desire for a relatively easy fix for this.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.