Can Wegovy & Ozempic Drive Another Strong Quarter for Novo Nordisk?

Core Insights - Novo Nordisk primarily generates revenue from its GLP-1 injections, Ozempic and Wegovy, which have seen increased demand due to expanded prescriptions and label changes [1][2] Revenue Performance - In Q1 2025, Ozempic sales reached DKK 32.7 billion (up 15%) and Wegovy sales were DKK 17.4 billion (up 83%), together accounting for approximately 66% of total revenues [2][9] - The growth rates of these drugs were impacted by the presence of compounded GLP-1s in the market [2] Market Strategy - Novo Nordisk successfully removed semaglutide drugs from the FDA's shortage list and advocated for a federal ban on mass compounding, limiting unauthorized versions in the U.S. market [3] - The company is enhancing Wegovy access through initiatives like NovoCare Pharmacy and exclusive formulary coverage with CVS Caremark, alongside international expansion [3] Future Growth Prospects - Upcoming label expansions for Ozempic and Wegovy, including new indications and formulations, are expected to drive continued growth [4] - Novo Nordisk is addressing supply constraints by increasing manufacturing capacity, while also benefiting from its oral T2D drug Rybelsus and a portfolio of insulin and rare disease treatments [4] Competitive Landscape - Eli Lilly is a significant competitor in the obesity market with its tirzepatide products, Mounjaro and Zepbound, which generated combined sales of $6.15 billion in Q1 2025, representing about 48% of Lilly's total revenues [5] - Other companies, such as Viking Therapeutics, are advancing in the development of GLP-1-based candidates, with ongoing late-stage studies for their investigational obesity drug VK2735 [6] Stock Performance and Valuation - Year-to-date, Novo Nordisk shares have declined by 24.1%, underperforming the industry and the S&P 500 [7] - The company's shares currently trade at a forward price/earnings ratio of 15.14, slightly above the industry average of 15.04, but significantly below its five-year mean of 29.25 [11] Earnings Estimates - Earnings estimates for 2025 have improved from $3.84 to $3.98 per share over the past 60 days, while 2026 estimates have decreased from $4.64 to $4.57 [14] - The stock's return on equity over the trailing 12 months is 80.95%, outperforming the large drugmaker industry average of 33.55% [18]