NVO vs. LLY: Which Obesity Powerhouse is the Stronger Bet Now?

Core Insights - Novo Nordisk (NVO) and Eli Lilly (LLY) are leading players in the diabetes and obesity market, primarily due to their successful GLP-1 products [1] - NVO's Diabetes and Obesity care segment generated $10.4 billion in sales in Q1 2025, while LLY's Cardiometabolic Health segment generated $9.2 billion [1] - NVO's segment accounts for 94% of its total sales, whereas LLY's segment contributes around 72% of its total revenues [1] Group 1: Company Performance - NVO has a strong presence in the diabetes care market, with significant demand for its semaglutide products, leading to an 11% increase in GLP-1 sales in the last quarter [3] - LLY's Mounjaro and Zepbound have rapidly become key revenue drivers, generating combined sales of $5 billion in Q1 2025, accounting for approximately 58% of the company's total revenues [11] - Both companies are experiencing exceptional sales and earnings growth, but LLY is expected to have a more favorable outlook due to its diversified product range [2][10] Group 2: Market Dynamics - The obesity market is projected to expand to $100 billion by 2030, prompting both NVO and LLY to invest in new product development [16] - Competition is intensifying, with other companies like Amgen and Viking Therapeutics advancing their GLP-1-based candidates [17] - NVO is facing challenges, including a leadership transition and setbacks in its pipeline, which may impact its market share [7][9] Group 3: Financial Estimates and Valuation - The Zacks Consensus Estimate for NVO's 2025 sales and EPS implies year-over-year increases of 18.94% and 18.90%, respectively [19] - LLY's 2025 sales and EPS estimates suggest a year-over-year increase of 33.03% and 68.98%, respectively [22] - LLY's shares trade at a higher price/earnings ratio of 30.21 compared to NVO's 16.05, indicating a more expensive valuation [25] Group 4: Investment Considerations - NVO's stock has seen a significant decline of 52.6% over the past year, creating bearish sentiment around the stock [35] - LLY is viewed as a better investment option due to its diversified portfolio and robust growth prospects, despite its higher valuation [34][36] - NVO's dividend yield is 2.42%, while LLY's is lower at 0.76%, which may influence investor preferences [29]