NVO Down 42% Year to Date: Is This an Indication to Sell the Stock?

Core Insights - Novo Nordisk (NVO) has faced significant challenges in 2025, with shares down 41.5% year to date despite resolving U.S. supply issues for its semaglutide-based products, Ozempic and Wegovy [1][9] - The company has cut its 2025 sales and operating profit growth outlook due to weaker-than-expected performance from Ozempic and Wegovy, intensified competition from Eli Lilly (LLY), foreign exchange impacts, and increased use of compounded semaglutide [2][9] - A major restructuring initiative has been announced, including the appointment of a new CEO and a reduction of approximately 9,000 employees, aiming for annualized savings of around DKK 8 billion by 2026 [3] Financial Performance - Ozempic and Wegovy generated DKK 152.5 billion in revenue during the first nine months of 2025, indicating their continued importance to NVO's financials [8] - Earnings estimates for 2025 have decreased from $3.66 to $3.57 per share, with 2026 estimates also declining from $3.91 to $3.65 [21] Competitive Landscape - Eli Lilly has emerged as a strong competitor, with its drugs Mounjaro and Zepbound generating combined sales of $24.8 billion in the first nine months of 2025, accounting for 54% of Eli Lilly's total revenues [11] - Smaller biotech firms are also entering the obesity treatment market, with Structure Therapeutics advancing its investigational candidate aleniglipron [5][25] Strategic Initiatives - Novo Nordisk is implementing strategic pricing changes for Wegovy and Ozempic to enhance demand and access, although this may lead to margin compression [4] - The company is expanding its pipeline with next-generation obesity treatments, including CagriSema and amycretin, and has submitted regulatory filings for new therapies in rare diseases and liver care [12][14][15] Market Position - Despite recent challenges, Novo Nordisk remains a dominant player in the diabetes and obesity care market, with a broad portfolio [7] - The stock is currently trading at a price/earnings ratio of 13.81, lower than the industry average of 16.59, indicating a potential undervaluation [18]