Down 61%, Is Novo Nordisk Stock Worth Buying on the Dip?

Novo Nordisk (NVO), the global leader in diabetes and obesity therapies, has faced a dramatic stock price decline of 61% since hitting an all-time high of $148.15 in June 2024. This plunge, driven by heightened competition and valuation concerns, has sparked debate among investors: Is this a buying opportunity, or a warning sign of structural challenges?

Financial Fortitude Amid the Decline

Despite the stock’s collapse, Novo Nordisk’s 2024 financial results remain robust. Total sales surged 25% (in Danish kroner) to DKK 290,403 billion, fueled by:
- Diabetes Care: Up 20%, driven by Ozempic and insulin products.
- Obesity Care: Surging 57%, with Wegovy capturing a 70.4% market share globally.

The Obesity Care segment’s dominance is critical, as it now represents 22% of total sales, up from 15% in 2023. The company also secured a 63% global GLP-1 market share by volume, underscoring its entrenched position.

Key Drivers of the 61% Decline

1. Intensifying Competition:
2. Rival Eli Lilly’s Zepbound outperformed Wegovy in clinical trials for weight loss, while its oral GLP-1 agonist orforglipron threatens Novo’s injectable dominance.

3. Analysts now project Novo’s 2025 sales growth could fall to 14–22%, down from the original 16–24% guidance, as competitors erode market share.

4. Supply Chain Strains:

5. Ozempic shortages in North America, exacerbated by U.S. demand, have delayed revenue growth. Manufacturing investments, including a $11.7 billion acquisition of Catalent facilities, aim to resolve this but have strained cash flow.

6. Valuation Concerns:

7. Novo’s forward P/E of 14 contrasts sharply with Eli Lilly’s 37, reflecting investor skepticism about its growth sustainability.

The Regulatory and Legal Crosshairs

Novo Nordisk faces mounting scrutiny:
- FDA Label Expansions: While Ozempic’s new indication for chronic kidney disease in diabetics broadened its use, safety concerns—like links to gastroparesis and NAION (eye damage)—have fueled over 1,500 lawsuits in an expanding MDL (multidistrict litigation).
- Patent Battles: Generic challenges to semaglutide (Wegovy/Ozempic) and tirzepatide (Eli Lilly’s Mounjaro) loom, though patents remain intact until at least 2027.

The Bull Case: Why Now Could Be the Time to Buy

1. Undervalued Metrics:

2. With a 2.7% dividend yield and trading at a 14x forward P/E, Novo offers a relative bargain compared to peers.

3. Pipeline Potential:

4. CagriSema, a next-gen weight-loss drug, and new indications for semaglutide (e.g., heart failure) could extend dominance beyond 2025.

5. Geographic Expansion:

6. Approval of Wegovy in China (home to over 100 million obese patients) opens a massive untapped market.

The Bear Case: Risks Lurking

• Market Saturation: The obesity drug market may face diminishing returns as competition intensifies.
• Regulatory Risks: Litigation over safety claims and patent delistings could derail growth.

Data-Driven Analysis

Conclusion: A Cautiously Optimistic Buy

Novo Nordisk’s 61% decline creates an intriguing entry point for long-term investors. While risks like litigation and competition are valid, the company’s dominant market share, strong cash flow, and dividend yield position it to rebound if it executes on its China strategy and pipeline.

Final Take:
- Buy: For investors willing to hold through near-term volatility.
- Hold: If you prioritize short-term stability over long-term growth.

The May 7, 2025 Q1 earnings report will be pivotal. If Novo reaffirms its 16–24% sales growth guidance, or even narrows the range favorably, the stock could rebound sharply. For now, the data suggests Novo Nordisk is worth buying at current levels—but with a close eye on its ability to outmaneuver rivals and navigate legal hurdles.