Novo Nordisk: One Stock to Buy Before the Market Wakes Up
Today, its obesity drugs are so popular they’re literally lifting Denmark’s GDP—yet the stock is trading at its cheapest valuation in a decade.
The market rarely gives you second chances on world-class businesses. This is one of them.
So why the stock drop?
Recently, Novo cut 2025 guidance to:
Sales growth: 8–14% (midpoint 11%)
EBIT growth: 10–16% (midpoint 13%)
The market didn’t like it — shares fell 22%. 📉
What are the key drivers:
U.S. obesity growth slowed from cheaper compounded GLP-1s
Wegovy underperformed internationally
Ozempic growth decelerated amid rising competition
And another headline: CEO transition.
After leading since 2017 (and joining in 1991), Lars Fruergaard Jørgensen will step down. On 7 August 2025, Mike Doustdar will become President & CEO.
Doustdar, currently EVP of International Operations, has a strong track record. Over the past decade, he’s more than doubled international sales to DKK 112B in 2024. His division spans all markets outside the US, with nearly 20,000 employees.
To me, the leadership change plus short-term sales headwinds are noise against a much bigger signal.
How They Make Money
Novo Nordisk isn’t your average sleepy pharma stock.
Controls ~70% of the branded obesity drug market and 63% of global GLP-1 sales.
Flagship drugs Ozempic and Wegovy have become cultural phenomena, fueling $42.1B in 2024 revenue and $14.5B in net income.
Over 80% of revenue comes from diabetes and obesity care—chronic conditions that generate recurring, predictable cash flow.
Rare disease therapies add high-margin niche revenue, and expansion into cardiovascular and kidney care opens billion-dollar new markets.
This is a subscription model for healthcare—patients stay on treatment for years, creating a cash flow machine.
Competitive Advantage
Owns 55% of the global GLP-1 market—category-defining drugs.
Trusted by doctors, regulators, and insurers worldwide.
Deep R&D pipeline (amycretin, CagriSema, once-weekly insulin).
Manufacturing moat—€10B+ expansion ensures it can meet surging demand.
Market Potential
800M+ people live with obesity globally—only a fraction treated.
Positioned to capture the lion’s share of a $298.7B+ future market.
The market is projected to achieve a Compound Annual Growth Rate (CAGR) of 9.94% by 2030.
Recurring Revenue, Relentless Innovation
With over 80% of revenue tied to diabetes and obesity care, Novo is a recurring revenue engine.
R&D drives growth: oral semaglutide and CagriSema promise even greater outcomes.
Novo is plowing over €10B into U.S. manufacturing to meet explosive demand.
Profitability & Capital Allocation
ROIC: 29% | ROE: 81%
Margins: Gross 85%, Operating 48%—elite even by pharma standards.
Reinvesting at 25%+ returns while buying back 2% of shares annually.
A capital-efficient compounder with discipline baked into the DNA.
Balance Sheet
$6.3B cash vs. $18.2B debt.
Interest coverage: 44x—no liquidity risk.
Goodwill is just 4.3% of assets—clean balance sheet.
Valuation Compression = Great Entry Point For Long Term Investors
Trading at 14x forward earnings vs. a 10-year average of 24x.
That’s 2015 prices for 2030 growth—and a 20–30% margin of safety.
Cheaper than Eli Lilly despite similar long-term growth tailwinds.
Management & Skin in the Game
Controlled by Novo Holdings (77% voting rights)—foundation-owned, ensuring patient, long-term decision-making.
New CEO Mike Doustdar doubled international sales to DKK 112B in 2024 and personally owns $53M in stock.
This is leadership with both a track record and real financial alignment.
Risks
Rising competition from Eli Lilly, Amgen, Roche.
U.S. pricing pressure (56% of sales are U.S.-based).
Supply bottlenecks—being addressed with new manufacturing sites.
Short-term slowdown in Wegovy sales growth.
Conclusion
Novo Nordisk remains a global leader in high-growth, high-margin markets with the balance sheet, governance, and innovation to dominate for decades. The stock’s current valuation is a gift for patient investors who can stomach short-term volatility.
In my view, this is one of the best opportunities in global healthcare right now—and I’m buying more at these levels.
SCC Rating: 82% | Undervalued
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Risk Disclosure: This content is for informational purposes only and does not constitute investment advice. Investing carries risk, including potential loss of principal. Always consult with a professional financial advisor to evaluate your risk tolerance and financial goals before making any investment decisions.
