Retail buyers purchase Novo dip after disappointing weight-loss drug knowledge

By Bhanvi Satija

(Reuters) – U.S. retail investor fund flows into Novo Nordisk (NYSE:NVO) surged 32-fold on Friday, because the Danish drugmaker’s weaker-than-expected weight problems drug knowledge supplied a uncommon dip-buying alternative, in keeping with Vanda (NASDAQ:VNDA) Analysis.

Every day internet flows climbed to $15.6 million from $0.49 million a day earlier, after eagerly anticipated knowledge confirmed Novo’s experimental drug, CagriSema, helped sufferers lower 22.7% of their weight—wanting the anticipated 25%.

Novo competes with U.S. rival Eli Lilly (NYSE:LLY) within the burgeoning marketplace for weight-loss remedies, which is projected to exceed $150 billion in income inside the subsequent decade.

“Retail buyers love to purchase dips, particularly in widespread shares..and accomplish that, till that does not work anymore,” stated Marco Iachini, senior vice chairman of analysis at Vanda.

Shares of Novo Nordisk dropped 27% on Friday, erasing over $100 billion in market worth. Its U.S.-listed shares tumbled 21% to $81.50, their lowest stage since August 2023.

“Proper now Novo solely dipped under S&P 500 efficiency for the primary time in 2 years so, in all probability too early to see them (retail buyers) surrender on their buy-the dip-bias,” he stated. The retail flows on Friday probably supplied an exit for institutional buyers.

Funds from retail buyers touched a one-day excessive of $23.5 million on March 7, knowledge from Vanda exhibits, after Novo’s amycretin drug helped overweight sufferers lower 13% of their weight in a examine.

The success of Novo’s Wegovy and Lilly’s Zepbound weight-loss medicine has revived retail curiosity within the healthcare sector.

“With their GLP-1 product available in the market and Eli Lilly being lots on the information…a variety of retail buyers learn about Lilly,” stated Sel Hardy, vice chairman of fairness analysis at CFRA.

She steered {that a} sell-off, like Lilly’s inventory dip in October, and mid-November, may present “a sexy entry level” for retail buyers

Web retail flows into Lilly have outpaced Novo within the second half of 2024, in keeping with Vanda.

For Lilly, internet retail purchases peaked in August after its weight-loss drug gross sales surpassed $1 billion for the quarter, prompting a $3 billion forecast improve.

Nevertheless, retail exercise in these shares lags behind tech giants similar to Nvidia (NASDAQ:NVDA) and Tesla (NASDAQ:TSLA), the place exercise usually reaches the excessive teenagers.