Novo Nordisk Plunges 21% in 3 Months: Buy, Sell or Hold the Stock?

Core Viewpoint - Novo Nordisk's stock has underperformed significantly, losing 21% in the past three months, while the industry grew by 4.6% [1][2]. Group 1: Stock Performance - Novo Nordisk shares are currently trading above their 50-day moving average but below their 200-day moving average [1]. - The company's stock has faced a decline due to several factors, including setbacks in its investigational obesity candidate, CagriSema, which has benefited its competitor, Eli Lilly [3][4]. - The removal of Eli Lilly's tirzepatide from the FDA's drug shortage list allows it to meet demand, potentially increasing its market share at the expense of Novo Nordisk's semaglutide products [4]. Group 2: Financial Performance - Despite recent setbacks, Novo Nordisk's revenues surged by 129% on a reported basis, with a net profit margin reaching a five-year high of 36% in 2023 [5][6]. - Wegovy, a key product, saw revenues grow by 86% to DKK 58 billion in 2024, while Ozempic sales increased by 26% to DKK 120 billion [9]. Group 3: Market Position and Competition - Novo Nordisk maintains a strong presence in the diabetes care market with a 33.7% global market share, driven by its GLP-1 products [8]. - The company is the global market leader in the GLP-1 segment, holding approximately 55.1% value market share [8]. - Competitors like Amgen and Viking Therapeutics are advancing in the development of GLP-1-based candidates, posing future competition [10]. Group 4: Growth Opportunities - Novo Nordisk is exploring additional uses for semaglutide, including potential treatments for heart failure and chronic kidney disease [11][12]. - The company is also diversifying its portfolio with new treatments for hemophilia A and B [13]. - Plans to expand the indications for Wegovy, Ozempic, and Rybelsus could increase patient eligibility and boost revenues [21]. Group 5: Valuation and Estimates - Novo Nordisk is trading at a premium valuation with a price/earnings ratio of 21.96 compared to the industry average of 17.8 [14]. - Earnings estimates for 2025 have slightly decreased from $3.88 to $3.84 per share, while 2026 estimates have increased from $4.53 to $4.66 [16]. - The company's return on equity stands at 84.69%, significantly higher than the industry average of 34.61% [19].