Novo Nordisk stock has declined due to disappointing phase 3 data and US policy risks.

From Morningstar: 2025-04-09 06:28:00

Novo Nordisk, a key player in diabetes treatment, holds a 34% share of the diabetes treatment market worth over USD 80 billion, and half of the insulin market valued at more than USD 15 billion. Despite its strong position, Novo Nordisk’s stock has been declining since December, with a 58% drop from its peak in June 2024.

The stock’s decline is attributed to disappointing phase 3 data for Novo Nordisk’s important pipeline candidate, CagriSema, impacting its market performance. Additionally, US policy risks are escalating, with potential Medicare negotiations and tariff concerns affecting the company’s outlook. Novo Nordisk already has a substantial manufacturing presence in the US, which could mitigate some of the impacts of tariffs.

Morningstar Director of Equity and Credit Research Karen Andersen believes that Novo Nordisk’s stock is undervalued, currently trading at a 32% discount to her estimated fair value of DKK 640. Despite challenges, the company’s focus on long-term strategy and innovative pipeline, including the amycretin program, presents opportunities for growth and market share expansion.

Novo Nordisk’s economic moat in diabetes treatment, strong R&D strategy, and efficient manufacturing techniques contribute to its profitability and competitive edge. The company’s fair value estimate has been raised to DKK 640 per share, reflecting a positive outlook for GLP-1 supply growth and market expansion. However, price pressure and US policy changes present risks for the company’s future performance.

While Novo Nordisk faces challenges and uncertainties, its portfolio of GLP-1 products and potential in emerging markets such as liver disease and Alzheimer’s offer growth opportunities. The company’s obesity therapy, Wegovy, and GLP-1 products like Ozempic and Rybelsus position it well to defend its market share and expand into new therapeutic areas.

On the other hand, Novo Nordisk’s competitors, pricing pressure, and slow uptake of certain products pose challenges for the company. Competition in the long-acting insulin market, slower adoption of oral GLP-1 Rybelsus, and supply constraints for obesity drug Wegovy are factors affecting Novo Nordisk’s growth potential.



Read more at Morningstar: Is Novo Nordisk Stock a Buy After its Collapse?