We came across a bullish thesis on Novo Nordisk A/S (NVO) on Long-Term Pick’s Substack by Dan. In this article, we will summarize the bulls’ thesis on NVO. Novo Nordisk A/S (NVO)’s share was trading at $84.03 as of Jan 29th. NVO’s trailing and forward P/E were 28.32 and 21.88 respectively according to Yahoo Finance.
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Novo Nordisk (NVO) has been experiencing a challenging period, primarily due to regulatory pressures and mixed trial results. Recently, the Centers for Medicare & Medicaid Services (CMS) included Novo Nordisk’s key GLP-1 drugs, Ozempic and Wegovy, in its list of 15 drugs for Medicare price negotiations. This announcement sent shockwaves through the market, leading to a notable drop in Novo’s stock price as concerns about future revenue impacts mounted. Despite this, the company remains a leader in diabetes care, with Ozempic and Wegovy commanding a 55% market share in the growing weight-loss drug sector.
On the positive side, Novo Nordisk also made headlines with the successful results of its STEP UP trial for Semaglutide 7.2 mg, which demonstrated a significant 20.7% weight loss over 72 weeks compared to placebo. This success highlights the company’s ongoing commitment to innovation, particularly in chronic disease management, and the full results will be presented at a scientific conference in 2025. Moreover, Novo Nordisk has been expanding its footprint in the cardiometabolic space through a strengthened partnership with Valo Health, further positioning itself as a key player in treating chronic diseases beyond diabetes.
The company has also been proactive in securing its manufacturing capabilities by acquiring three additional sites, which strengthens its position in production and distribution. This is complemented by the ongoing share repurchase program, which reflects Novo Nordisk’s commitment to returning value to shareholders, with over 3.4 million shares repurchased as of January 2025.
However, not all news has been positive. Novo Nordisk faced setbacks with its CagriSema obesity treatment, as the results from the REDEFINE-1 trial were disappointing, showing lower-than-expected weight loss compared to current treatments. Despite this, the company plans to initiate a new trial in mid-2025 to explore CagriSema’s potential further. The combination of regulatory hurdles, disappointing trial outcomes, and stock price declines has led to mixed analyst sentiment. While UBS upgraded the stock from “neutral” to “buy,” concerns about patent expirations and future sales projections have weighed heavily on the stock’s outlook.
Novo Nordisk’s stock remains below its fair price by 35.21%, presenting an attractive opportunity for long-term investors despite the short-term challenges. With strong leadership in the diabetes and weight-loss drug markets, an expanding pipeline, and strategic investments, Novo is poised to continue its dominance in the healthcare sector, offering substantial upside potential once market concerns are addressed.
Novo Nordisk A/S (NVO) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 61 hedge fund portfolios held NVO at the end of the third quarter which was 67 in the previous quarter. While we acknowledge the risk and potential of NVO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.