NVO Down 10% in 3 Months: Is This an Indication to Sell the Stock?

Core Insights - Novo Nordisk (NVO) shares have declined 10.2% over three months due to regulatory setbacks, a cut in 2025 guidance, and reduced demand for its semaglutide-based drugs, Ozempic and Wegovy, particularly in the U.S. obesity market [1][10] - The company has faced increased competition from Eli Lilly's Mounjaro and Zepbound, leading to a guidance cut in July [1][2] - NVO's third-quarter performance fell short of expectations, prompting further reductions in its 2025 sales and operating profit outlook [2] Financial Performance - NVO's global diabetes market share decreased to 31.6% in September as Eli Lilly gained market share [2] - Combined sales of Ozempic and Wegovy reached DKK 152.5 billion in the first nine months of 2025, with third-quarter sales of DKK 51.1 billion reflecting year-over-year growth of 9% and 23% respectively [7] - Earnings estimates for 2025 have declined from $3.85 to $3.58 per share over the past 60 days, with 2026 estimates dropping from $3.96 to $3.70 [22] Strategic Initiatives - Novo Nordisk announced a restructuring program in September 2025, aiming to reduce its workforce by about 9,000 employees and achieve annualized savings of around DKK 8 billion by 2026 [3] - A new agreement with the U.S. Administration will reduce prices for Ozempic and Wegovy starting in 2026 to enhance patient access, while also providing a three-year tariff exemption [4] Market Dynamics - The obesity treatment market is becoming increasingly competitive, with projections by Goldman Sachs estimating it could reach $100 billion by 2030 [25] - Novo Nordisk is expanding its semaglutide offerings through new indications and is awaiting FDA approval for a 25 mg oral semaglutide for obesity, which could enhance adherence and market share [9][12] Valuation and Stock Performance - Year-to-date, NVO shares have lost 43.9%, underperforming the industry and the S&P 500 [16] - The company's shares currently trade at a price/earnings ratio of 13.10, lower than the industry average of 16.72 [19] - NVO's stock is trading significantly below its five-year mean of 29.25, indicating a potential undervaluation [19]