Key Takeaways
- Novo Nordisk is currently perceived as being at a valuation discount, trading near its lowest forward price-to-earnings multiple in the last decade, despite analysts forecasting sustained growth above 25% into 2026.
- Market apprehension appears centred on intensifying competition in the GLP-1 drug category, particularly from Eli Lilly, and concerns over long-term patient retention and pricing power.
- The company’s financial performance remains exceptionally strong, with recent quarters showing consistent double-digit revenue and earnings growth, underpinned by its blockbuster drugs Ozempic and Wegovy.
- The investment case hinges on whether the market is overstating the competitive threats and underestimating Novo Nordisk’s ability to defend its market share and innovate within the vast, and still expanding, global obesity market.
An interesting paradox is unfolding around the Danish pharmaceutical giant, Novo Nordisk. As noted by market analyst WealthyReadings, the company is trading near its lowest forward valuation of the past decade.1 This valuation compression is occurring simultaneously with analyst consensus forecasting revenue growth of over 25% per annum through to 2026. Such a disconnect warrants a closer look: is the market correctly pricing in future headwinds, or is it presenting a rare opportunity to acquire a high-growth compounder at a reasonable price?
The Anatomy of Market Scepticism
A company does not become one of Europe’s most valuable enterprises without generating high expectations. The current valuation suggests the market is pricing in a significant deceleration from its recent trajectory. The narrative of concern has two primary threads: competition and retention. The commercial success of Ozempic (for diabetes) and Wegovy (for obesity) has not gone unnoticed. Eli Lilly’s dual-agonist drugs, Mounjaro and Zepbound, are formidable competitors, and the “obesity wars” are expected to intensify, potentially leading to pricing pressures that could erode Novo’s formidable gross margins.2
Beyond the top-line rivalry, there are quieter concerns about patient adherence and the durability of demand. These GLP-1 therapies are not a one-time cure but a long-term treatment. The high cost and potential for side effects raise valid questions about how many patients will remain on the drugs for years, a factor critical for long-term discounted cash flow models. Whispers of dissatisfaction with management, while often nebulous, also contribute to a sentiment of caution, suggesting the market is seeking a higher margin of safety before rewarding the company with a premium multiple.
A Financial Engine Firing on All Cylinders
While the market frets about the future, the present tells a story of remarkable financial strength. Novo Nordisk’s recent performance demonstrates a company executing at an extremely high level, struggling more with meeting demand than creating it. The financial results from the past year paint a picture of relentless growth, driven by the near-insatiable demand for its GLP-1 products.
The company’s own guidance for fiscal year 2025 projects sales growth between 19-27% and operating profit growth between 20-28% at constant exchange rates.3 This level of confidence from management stands in stark contrast to the valuation’s implicit pessimism.
| Period | Revenue (DKK Billions) | Revenue Growth (YoY) | Operating Profit (DKK Billions) | Gross Margin |
|---|---|---|---|---|
| Q1 2025 | 65.3 | 22.0% | 31.8 | 84.5% |
| Q4 2024 | 85.6 | 29.9% | 39.1 | 83.7% |
| Q3 2024 | 71.3 | 23.0% | 33.9 | 83.5% |
| Q2 2024 | 68.1 | 25.0% | 31.2 | 84.0% |
| Q1 2024 | 65.3 | 24.0% | 30.5 | 83.8% |
Source: Novo Nordisk Quarterly Reports, 2024-2025.3
Positioning for a Multi-Decade Theme
The debate over Novo Nordisk is less about the next quarter’s earnings and more about the long-term structure of the obesity market. This is not a fleeting trend but a structural shift in healthcare. Landmark clinical trials, such as the SELECT study, have demonstrated that the benefits of these drugs extend beyond weight loss to include significant reductions in cardiovascular events like heart attacks and strokes.4 This data is crucial for securing broader reimbursement from insurers and embedding GLP-1s as a standard of care, transforming them from lifestyle drugs to essential medicines.
The investment thesis for Novo Nordisk is therefore a wager that the total addressable market is large enough to support multiple winners, and that the company can defend its territory through incremental innovation, manufacturing scale, and market access. The competitive threat is real, but the pie is growing at a rate that may render the battle for market share less of a zero-sum game than currently feared.
Ultimately, the current share price reflects a degree of scepticism that may prove excessive. For investors with a long-term horizon, the opportunity lies in betting that Novo Nordisk can navigate the competitive landscape effectively. The speculative hypothesis is that the next major catalyst will not be a defensive acquisition, but rather positive data from its next-generation pipeline, such as the oral GLP-1 amycretin or the combination therapy CagriSema. A successful pipeline evolution could re-frame the competitive narrative entirely, making today’s valuation appear, in retrospect, rather compelling.
References
- WealthyReadings. (2025, July 12). [$NVO is trading close to its lowest forward valuation of the last decade. The market is worried about management & a slower demand/retention of its GLP-1 branded drugs. In the meantime, analysts forecast 25%+ growth until FY26.]. Retrieved from https://x.com/WealthyReadings/status/1831387009102877048
- The Motley Fool. (2025, July 9). 3 Reasons I Bought Novo Nordisk Stock Instead of Eli Lilly. Retrieved from https://www.fool.com/investing/2025/07/09/3-reasons-i-bought-novo-nordisk-stock-instead-of-e/
- Novo Nordisk. (2025, May 2). Financial results for Q1 2025. Retrieved from https://www.novonordisk.com/investors/financial-results.html
- Lincoff, A. M., Brown-Frandsen, K., Colhoun, H. M., Deanfield, J., Emerson, S. S., Esbjerg, S., … & Ryan, D. H. (2023). Semaglutide and Cardiovascular Outcomes in Obesity without Diabetes. *The New England Journal of Medicine*, *389*(24), 2221-2232. Retrieved from https://www.nejm.org/doi/full/10.1056/NEJMoa2307563
