Key Takeaways
- Jefferies shifted Zealand Pharma from Buy to Hold, pointing to an absence of near-term value drivers
- Analysts reduced price target to DKK320 from DKK505 — representing a 37% decrease
- Success probability for survodutide lowered to 40% from 60% following underwhelming Phase III results
- Major catalysts for survodutide and petrelintide not anticipated until 2027–2028 timeframe
- ZEAL shares declined 5.32% following the announcement; Copenhagen-traded ZELA fell 2.7%
Shares of Zealand Pharma (ZEAL) retreated 5.32% during Tuesday’s trading session after investment bank Jefferies revised its rating on the Danish biotechnology company from Buy to Hold, accompanied by a steep 37% reduction in its price target from DKK505 to DKK320.
The company’s Copenhagen-listed shares (ZELA) similarly declined 2.7% to DKK273.40, trailing the broader OMXC25 index which lost 0.5% during the session.
Jefferies implemented a 35% discount to its sum-of-the-parts analysis, reflecting the absence of significant near-term value drivers over the upcoming 6 to 12 month period.
The rating revision comes in response to subpar Phase III clinical data for survodutide, Zealand’s experimental treatment for obesity and liver conditions, which was unveiled at the American Diabetes Association conference.
As a consequence, Jefferies reduced its probability of success estimate for survodutide from 60% to 40%. This adjustment carries significant implications for a company whose obesity-focused pipeline represents a substantial portion of its potential value.
Survodutide Disappoints, Creating Valuation Uncertainty
The investment firm indicated that pivotal liver disease MASH data for survodutide won’t materialize until the latter half of 2027, establishing that readout as crucial for reducing risk around the asset.
The overall valuation of survodutide now depends heavily on positive Phase III liver disease trial outcomes and initial commercial performance metrics — both milestones remaining more than twelve months in the future.
Jefferies further noted that establishing confidence in petrelintide, Zealand’s amylin-mechanism obesity candidate, will require substantial time.
The firm observed that competing obesity treatment data anticipated throughout the next year could diminish petrelintide’s ability to differentiate itself before more mature clinical results become available.
Petrelintide Advances to Phase 3, But Timeline Extended
Notwithstanding the downgrade, Jefferies recognized that Zealand’s longer-term valuation proposition remains compelling. The firm highlighted the company’s net cash reserves, rare disease product portfolio, and risk-adjusted valuation of its obesity candidates as positive supporting elements.
Zealand Pharma carries a market capitalization of approximately $3 billion, with InvestingPro analytics indicating the stock trades at a P/E multiple of 3.13, suggesting potential undervaluation based on Fair Value metrics.
Petrelintide successfully progressed into Phase 3 clinical development in partnership with Roche, building on encouraging Phase 2 ZUPREME-1 data demonstrating substantial double-digit weight reduction with tolerability comparable to placebo.
Phase 3 clinical trials are projected to commence during the second half of 2026.
Deutsche Bank recently elevated its price objective for Zealand Pharma to DKK300 from DKK275, referencing favorable survodutide trial outcomes — though that upgrade now appears premature considering the latest data disappointment.
Jefferies indicated that investors may face a waiting period extending into 2027 and 2028 for clinical data releases capable of meaningfully altering market sentiment regarding the shares.
The company also recently expanded its share capital by DKK53,183 through employee warrant exercises, issuing 53,183 additional shares at multiple price points.
Zealand nominated Camilla Sylvest for appointment to its Board of Directors, subject to shareholder ratification at a meeting planned for May 2026.
Shares are presently trading at DKK273.40 in Copenhagen, while the US-listed ZEAL closed down 5.32% for the trading day.
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