Novo Nordisk Stock Analysis: Challenges and Potential Upsides

Novo Nordisk stock has fallen 39% from its peak, leading investors to question the right time to buy. The pharmaceutical company faces competition but shows potential for recovery as catalysts may drive price increases.

Date: 05-03-2025

AI Rating: 6

Overview of Novo Nordisk's Performance

Novo Nordisk's stock performance has been notable, with shares up by approximately 191% over the past five years, significantly outperforming the S&P 500 index, which has gained 94%. However, its stock has recently declined by about 39% from its previous peak, prompting investors to reconsider the timing for potential investments.

Earnings Per Share (EPS) Growth

The report indicates that Novo Nordisk has raised earnings per share by more than 20% annually over the past five years. This consistent growth is a promising sign for investors and suggests that the company has a strong underlying financial performance. However, expectations suggest that future growth in earnings may moderate to a mid-to-high single-digit annual percentage, which may not meet the peaks seen in the past.

Sales Environment

Novo Nordisk is facing significant challenges from competing drugs, particularly from Eli Lilly's tirzepatide. Sales of semaglutide reached $28.4 billion last year, representing a 35% growth, while tirzepatide saw a remarkable 208% increase in sales. This competitive landscape may affect Novo Nordisk's future sales growth and market share. The FDA's decision regarding the resolution of drug shortages and possible lawsuits from compounding pharmacy groups could also impact future revenues.

Potential for Future Growth

If the FDA's determination about drug shortages holds, Novo Nordisk might experience growth in semaglutide sales in 2025 that outpaces 2024. The company is still actively developing cagrisema, which could potentially reinvigorate its growth trajectory if it proves to be more effective than current competitors. Furthermore, the increasing overall market for GLP-1 drugs could present significant revenue opportunities going forward.

In conclusion, while Novo Nordisk is currently navigating a challenging environment, its solid EPS growth and potential future catalysts endorse it as a reconsideration for investment, particularly at its current valuation.

Stocks: NVO LLY