Novo Nordisk NOVO B is expected to release its first-quarter earnings report on May. 7. Here’s Morningstar’s take on what to look for in Novo Nordisk’s earnings and stock.
Key Morningstar Metrics for Novo Nordisk
- Fair Value Estimate: DKK 640.00
- Morningstar Rating: ★★★★
- Economic Moat: Wide
- Morningstar Uncertainty Rating: High
Estimated Earnings Release Date
- Wednesday, May. 7, 2025, at 07.30 CET.
What to Watch for in Novo Nordisk’s Q1 Earnings
Currency: We expect the prior FX tailwind will likely turn to a headwind as USD weakens.
At Q4, Novo gave constant currency 16-24% sales growth guidance, whether that will be maintained is the question - we currently model 21% constant currency growth, which is driven by our expectation for 30% growth from GLP-1 therapies across diabetes and obesity.
- I think this growth will be possible despite recent superiority data for Lilly’s Zepbound over Novo’s Wegovy, partly because of a boost in growth from the end of supply shortages and the expected end of unbranded competition from compounded semaglutide starting in mid-May. The obesity market should continue to grow rapidly, and while Novo will likely lose share, it should still enjoy strong growth.
- I am hoping for more information about how important the NovoCare direct sales site will be for Wegovy, particularly as compounding winds down, and how they plan to compete with Lilly’s own LillyDirect.
Data/Pipeline: Oral semaglutide obesity launch could happen in 2026 - they filed and will likely be ahead of Lilly’s orforglipron (filing by the end of 2025). I think the potential of oral semaglutide to serve the US obesity market is underappreciated by the market.
We expect an update on how quickly amycretin can move forward in development and whether it’s realistic to think about that as a potential oral or injectable (they have data for both…but manufacturing is key limitation for the oral version)
We are also hoping for updates on timelines for upcoming data for semaglutide in liver disease (this quarter?) and Alzheimer’s data (still later this year?) and plans in new indications outside of cardiometabolic space for cagrisema or amycretin. It will be interesting see how management ultimately weighs the balance between these two therapies, as amycretin seems like the stronger program, but has a longer timeline to market (we assume cagrisema approval in 2027 and amycretin in 2029)
Novo Nordisk Stock Price
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Fair Value Estimate for Novo Nordisk
With its 4-star rating, we believe Novo Nordisk is undervalued trading at a 30% discount.
We raised our Novo Nordisk fair value estimate to DKK 640 per share from DKK 600 after Novo’s latest earnings report in February, following a solid management outlook for 2025 that likely reflects stronger growth in GLP-1 supply than we had previously assumed.
We expect Novo to gain $75 billion of a more than $200 billion global GLP-1 market in diabetes and obesity by 2031, ahead of semaglutide’s 2032 patent expiration, with Lilly standing as the firm’s key competitor. GLP-1 growth drives our overall five-year forecast for 14% top-line and 16% bottom-line growth through 2029.
To factor in the potential impact of the Inflation Reduction Act, we include a 3% step down in US sales from Medicare inflation caps, and we assume Medicare negotiation for Ozempic and Rybelsus beginning in 2027, well ahead of their 2032 patent expirations. We do not include a step down from Medicare Part D redesign, as this could actually make cheaper drugs like Novo’s diabetes medicines more affordable for patients.
Read more about Novo Nordisk’s fair value estimate.
Novo Nordisk’s Economic Moat Rating
The company’s strong intangible assets in diabetes and related cardiometabolic diseases like obesity give the firm a wide economic moat that will shield profitability for the long run. A focused research and development strategy allows the firm to repeatedly extend patent protection through innovation. Efficient manufacturing techniques and economies of scale have allowed Novo’s insulin business to provide strong global profitability, qualities that it shares with the only two other global insulin players, Sanofi SAN and Eli Lilly LLY.
However, we don’t think Novo’s cost advantages are strong enough to stand as a moat source for the entire firm, given that Novo’s foundation has rapidly shifted from insulin (20% of 2023 sales) to GLP-1 therapies (70% of 2023 sales).
Read more about Novo Nordisk’s economic moat.
Financial Strength
We assign Novo Nordisk an Exemplary Capital Allocation Rating, with the rating reflecting our belief that Novo Nordisk possesses a sound balance sheet, exceptional investments outlook, and appropriate shareholder distributions.
As of the end of 2024, Novo held roughly DKK 103 billion in borrowings against DKK 26 billion in cash and equivalents. Historically, Novo has held low debt levels, but used debt to finance acquisitions like Emisphere(delivery technology) in 2020, Dicerna(RNAi technology) in 2021, and Catalent sites(manufacturing) in 2024. With strong free cash flows, Novo is in a solid position to continue investing in its internal and externally acquired pipeline and distributing cash via dividends and share repurchases.
Read more about Novo Nordisk’s financial strength.
Risk and Uncertainty for Novo Nordisk
Novo Nordisk has a broad global insulin business, but price pressure and growing reliance on the high-growth GLP-1 class add volatility to potential cash flows, and we are maintaining our Morningstar Uncertainty Rating at High.
Our Uncertainty Rating for Novo Nordisk is not materially affected by environmental, social, and governance risks, although we see access to basic services (tied to drug pricing) as the biggest ESG risk the firm needs to manage. Novo Nordisk sees roughly 57% of its sales from the US pharmaceutical market, giving it significant exposure to US policy changes. Novo’s portfolio has high exposure to Medicare, and the firm faced pressure due to US legislation that increased the portion of the Medicare Part D donut hole covered by manufacturers in 2019 (from 50% to 70%) and increased the size of the donut hole in 2020.
Read more about Novo Nordisk’s risk and uncertainty.
NOVO Bulls Say
- Novo’s obesity therapy Wegovy is significantly expanding the obesity treatment market given its strong efficacy and is poised to remain a key drug in the market until patent expiration in 2032.
- With a solid portfolio of GLP-1 products, including injectable Ozempic and oral Rybelsus, Novo is well positioned to defend its formidable diabetes market share.
- Semaglutide is also being studied in areas including liver disease (NASH) and Alzheimer’s, and Novo could achieve a strong share in these nascent markets.
NOVO Bears Say
- Tresiba’s strong profile in the long-acting insulin market hasn’t been enough to defend it from US pricing pressure due to competition from Sanofi and Lilly, and biosimilar insulins have weighed on category pricing since 2017.
- Novo’s Victoza and Ozempic have made GLP-1 a key part of the firm’s diabetes growth, but oral GLP-1 Rybelsus has had slower uptake, and Lilly’s newly approved Mounjaro provides strong competition
- Novo’s obesity drug Wegovy had a slow launch due to supply constraints, and Zepbound, which is Lilly’s obesity drug, has a superior profile.
This article was compiled by Johanna Englundh.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
