Global financial markets are in turmoil this morning after the US President announced sweeping tariffs on several countries in a push to lower the nation’s trade deficit.
Trump’s new tariffs are particularly expected to hurt European companies with significant revenue exposure to the United States.
Two of these companies are the Danish pharmaceutical behemoth Novo Nordisk and the British medical equipment maker Smith & Nephew, according to analysts at Bank of America Securities.
Novo Nordisk A/S (NYSE: NVO)
BofA expects Trump’s tariffs to significantly pressure Novo Nordisk stock as the weight-loss drug giant drives more than half of its revenue from the US.
Lars Fruergaard Jorgensen, the chief executive of Novo Nordisk, had previously warned of higher prices and even drug shortages if the Republican leader proceeded with significant tariffs on Europe.
Fears of higher tariffs resulted in a more than 20% decline in the US-listed shares of Novo Nordisk in March, even though the pharmaceutical firm reported better-than-expected profit for its fiscal Q4.
At the time, Jorgensen expressed confidence that Novo Nordisk was fairly positioned to compete with Lilly in the US with a “tablet-based treatment” for weight loss.
But that may be in question now that Trump has announced new tariffs on Denmark.
Plus, the White House initiative could disable Novo Nordisk from achieving a 21% year-on-year increase in net profit to about 101 billion kroner in 2025 as well.
However, heading into Thursday, Wall Street was super bullish on Novo Nordisk stock.
Analysts currently have a consensus “buy” rating on the pharma stock with the mean target of about $102, which indicates potential for a more than 50% upside from current levels.
Smith & Nephew plc (NYSE: SNN)
BofA also expects the British manufacturer of medical devices, Smith & Nephew, to be hit hard in the wake of higher tariffs.
Much like Novo Nordisk, the London headquartered firm currently generates more than half of its revenue from the US.
Since early March, SNN shares have lost nearly 10% as investors digest what the new tariffs environment could mean for Smith & Nephew.
Note that Deepak Nath, the chief executive of Smith & Nephew, recently confirmed that the firm has meaningful manufacturing exposure to China as well, particularly in its wound segment.
Wall Street currently has a consensus “moderate buy” rating on Smith & Nephew shares.
However, the average price target of about $28 is roughly the same as SNN’s share price at the time of writing.
That said, Smith & Nephew is a dividend stock that currently yields a healthy 2.67%, which makes it somewhat more attractive to own amidst the challenging macroeconomic backdrop.
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