From Morningstar: 2025-05-02 05:55:00

Novo Nordisk is set to release its Q1 earnings report on May 7. Morningstar predicts a shift from prior FX tailwind to headwind due to USD weakening. Growth is expected, driven by GLP-1 therapies and boosted by market expansion despite recent competition. Updates on pipeline progress, new indications, and competition with Lilly are anticipated.

Novo Nordisk’s fair value estimate is raised to DKK 640 per share, reflecting strong growth in GLP-1 supply. The company aims to gain a significant share of the global GLP-1 market by 2031. Factors like inflation reduction and Medicare negotiation could impact future sales and profitability. The firm’s moat rating remains wide due to its research, development, and manufacturing capabilities.

Novo Nordisk demonstrates exemplary capital allocation with a solid balance sheet and investment outlook. The company’s history of low debt and strong cash flow allows for continued investment in pipeline development and shareholder distributions. Recent acquisitions have enhanced the company’s capabilities and financial strength.

Despite a global insulin business, Novo Nordisk faces price pressure and uncertainty due to reliance on the growing GLP-1 class. High volatility in cash flows and exposure to US policy changes contribute to the firm’s high uncertainty rating. ESG risks are managed well, with a focus on maintaining access to essential services tied to drug pricing. Novo Nordisk’s portfolio faces pressure from US legislation affecting Medicare coverage, increasing the Medicare Part D donut hole coverage by manufacturers and its size. Novo’s obesity therapy Wegovy is expanding the market with strong efficacy until patent expiration in 2032, while its GLP-1 products defend its diabetes market share.

Tresiba’s struggle against pricing pressure in the insulin market due to competition has affected Novo, despite the success of Victoza and Ozempic. Novo’s obesity drug Wegovy had a slow launch, while its oral GLP-1 Rybelsus faces competition from Lilly’s Mounjaro. Semaglutide holds promise in other medical areas like liver disease and Alzheimer’s.

Novo’s solid portfolio of GLP-1 products positions it well in the diabetes market, but faces challenges from biosimilar insulins and competition. The company’s obesity drug Wegovy is expanding the market, but faces supply constraints. Novo’s semaglutide is being studied in new markets like liver disease and Alzheimer’s.



Read more at Morningstar: Going Into Earnings: Is Novo Nordisk Stock a Buy, a…