Novo Nordisk stock to not stop Denmark from lagging Europe

BLOOMBERG

Blockbuster obesity drug maker Novo Nordisk A/S became more valuable than Denmark’s economy in 2023, but that wasn’t enough to prevent the domestic stock index from underperforming this year. The blue-chip OMX Copenhagen 25 gauge has limped to a gain of about 4%, despite the nearly 45% pop in the shares of Novo, its biggest-weighted stock. That’s far below the double-digit increases posted by Paris’ CAC 40, Germany’s DAX and Europe’s Stoxx 600 this year.
Removing the contribution from Novo — which this year became Europe’s most valuable listed company amid demand for diabetes drug Ozempic and weight loss medicine Wegovy — the Copenhagen index would have fallen by around 3%, with several of its biggest members struggling with their own challenges.
Drugmaker Genmab is down 28% year to date, with the slump accelerating in October after a drug trial disappointed.
Elsewhere, renewables firm Orsted A/S has lost about 40% of its market capitalisation after a series of production and supply challenges impacted the firm and wider renewables sector.
In addition, several members of the Copenhagen benchmark are richly valued stocks that have fared less well amid surging interest rates, according to Per Hansen, investment economist at Nordnet Denmark. “Denmark has been, and is very, Novo Nordisk-centric,” he said, explaining that the past year’s high interest-rate environment “has been costly to richly-valued, Danish high-quality stocks trading at high multiples.”
Over half of the OMXC25’s 25 members trade at valuations higher than that of the Stoxx 600, and Hansen mentioned Coloplast A/S as an example. The healthcare materials maker is the OMXC25 gauge’s sixth-biggest member, currently trades at more than 30-times forward earnings and is down nearly 5% this year. Looking ahead, the index may not get the same kind of support from Novo next year, as analysts see just 9% upside on average over the next 12 months.