Is Novo Nordisk Still a Buy Amid Technical Downturns and Strong Fundamentals?

In the ever-shifting landscape of healthcare investing, Novo Nordisk (NVO) stands as a paradox: a dominant innovator in the GLP-1 receptor agonist market, yet trading at a valuation that seems disconnected from its fundamentals. As the stock navigates a technical downturn, the question arises: Is this a contrarian opportunity for investors willing to look beyond short-term volatility?

Fundamental Strengths: A Pharma Titan’s Resilience

Novo Nordisk’s financial performance in 2023 and early 2025 underscores its dominance. Prescription drug sales surged by 32.8% in 2023, reaching $33.7 billion, propelling the company to 11th in the global biopharma rankings [2]. Its flagship drugs, Ozempic and Wegovy, have become cornerstones of the diabetes and obesity treatment markets. Ozempic’s sales grew 62.1% to $13.9 billion in 2023, while Wegovy added $4.55 billion in revenue [2]. Together, Novo Nordisk and Eli Lilly control 97% of the GLP-1 market [1], a testament to their technological and commercial prowess.

Q2 2025 results further highlight resilience. Revenue hit $11.68 billion, with net income at $4.03 billion, despite a revised full-year guidance due to slower U.S. adoption of Wegovy and Ozempic [2]. Gross margins remain robust at 83.5%, reflecting pricing power and operational efficiency [4]. Yet, the stock trades at a 4.9x P/S multiple—well below Eli Lilly’s 14x—despite outperforming its peer in absolute revenue [4]. This valuation gap suggests the market may be underappreciating Novo Nordisk’s long-term potential.

Technical Downturns: A Market Correction or a Buying Opportunity?

The technical picture is mixed. Over the past six months, NVO has been in a falling trend channel, testing resistance at $58.00 [1]. Short-term momentum, as measured by RSI, is overbought (above 70), hinting at a possible correction [1]. Meanwhile, moving averages signal conflicting signals: the 20-day and 8-day SMAs suggest a “Buy,” while the 50-day and 200-day SMAs lean “Sell” [2]. The 200-day EMA remains significantly higher than the current price, reinforcing bearish sentiment [2].

Recent price action in early September 2025 shows slight volatility, with the stock closing at $55.23 on September 5 after fluctuating between $54.73 and $56.08 [1]. While the stock has yet to break above key resistance levels like $69.38 and $84.83 [1], its position in a historically significant “Ideal Buy Zone”—supported by a long-term channel and volume-weighted pivot—suggests a potential inflection point for contrarian investors [1].

Contrarian Value Accumulation: Analysts and Institutions Bet on the Long Term

Analyst ratings and institutional activity paint a nuanced picture. BNP Paribas Exane upgraded NVO to “neutral” in Q3 2025, setting a $54 price target (8.46% upside from the previous close) [3]. Meanwhile, TD Cowen reiterated a “Buy” with a $70 target, and Morgan Stanley assigned a $99 target (74.48% upside) [1]. The average price target across analysts is $68.50, implying a 20.73% upside from the September 3 closing price of $56.74 [1].

Institutional investors are also accumulating. As of Q2 2025, 1,457 hedge funds and large institutions held $21.2 billion in NVO, with 568 increasing their stakes [1]. A Danish pension fund’s recent contrarian position and surging institutional call option activity—particularly for the $60 strike expiring August 29—signal confidence in the stock’s upside potential [1]. Novo Nordisk’s Zacks Rank upgrade to #2 (Buy) further underscores improving fundamentals [2].

Conclusion: A Case for Strategic Entry

Novo Nordisk’s technical downturns, while concerning, may mask a compelling value proposition. The company’s fundamentals—driven by market-leading GLP-1 drugs, resilient margins, and a global patient base of 46 million—position it as a long-term winner in the obesity and diabetes care space [4]. While near-term headwinds like U.S. adoption delays and valuation skepticism persist, the stock’s undervaluation relative to peers and the growing confidence of analysts and institutions suggest a contrarian opportunity.

For investors with a multi-year horizon, Novo Nordisk’s current price range offers a chance to capitalize on a dominant innovator at a discount. As the company prepares to report Q3 2025 results on November 5 [4], the coming months could provide critical clarity on whether the market will finally align with its fundamentals.

Source:
[1] Novo Nordisk (NVO) Stock Forecast & Price Target [https://www.tipranks.com/stocks/nvo/forecast]
[2] 2024 Pharm Exec Top 50 Companies [https://www.pharmexec.com/view/2024-pharm-exec-top-50-companies]
[3] Novo Nordisk A/S (NYSE:NVO) Upgraded at BNP Paribas ... [https://www.marketbeat.com/instant-alerts/novo-nordisk-as-nysenvo-upgraded-at-bnp-paribas-exane-2025-08-13/]
[4] Novo Nordisk Offers Greater Value Proposition With ... [https://www.itiger.com/news/1125711864]