Novo Nordisk Plunges 2.6% Amid Legal Storm and Rival Drug Data – What’s Next for NVO?

Summary
• Novo Nordisk faces a class-action lawsuit over alleged securities fraud, with investors suing for misleading growth projections.
• Eli Lilly’s new obesity drug data sparks market jitters, overshadowing Novo’s recent market expansion struggles.
• NVO trades at $54.87, down 2.6% intraday, with a 52-week low of $45.05 and a dynamic PE of 13.9.

Novo Nordisk’s stock is in freefall as legal and competitive pressures collide. A securities lawsuit accuses the company of overstating GLP-1 market potential, while Eli Lilly’s obesity drug data intensifies sector rivalry. With NVO trading near its 52-week low and key technical indicators flashing caution, investors are scrambling to assess the fallout.

Legal Scrutiny and Rival Innovation Trigger NVO’s Sharp Decline
The 2.6% intraday drop in Novo Nordisk’s stock is a direct consequence of twin headwinds: a securities lawsuit alleging misleading growth projections and Eli Lilly’s new obesity drug data. The class-action complaint claims Novo exaggerated its ability to penetrate the GLP-1 market, particularly by downplaying the impact of compounded GLP-1s and patient switching dynamics. This was compounded by Eli Lilly’s announcement of positive Phase 3 results for its oral obesity drug orforglipron, which Barclays called a ‘slight negative’ for Novo despite not altering its fundamental outlook. The combination of legal uncertainty and competitive threats has triggered a sell-off, with NVO’s price collapsing 21.83% on July 29 after the company cut its sales and profit guidance.

Pharma Sector Splits as Eli Lilly Surges, NVO Crumbles
The pharmaceutical sector is polarized, with Eli Lilly (LLY) surging 4.16% on optimism around its obesity drug pipeline, while Novo Nordisk (NVO) tumbles. LLY’s positive trial data for orforglipron has positioned it as a key contender in the oral GLP-1 space, contrasting with Novo’s struggles to defend its market share. This divergence highlights the sector’s bifurcation: innovators with scalable oral solutions are outperforming peers reliant on injectables. Investors are shifting capital toward companies with diversified product pipelines, leaving Novo vulnerable to margin pressures and legal headwinds.

Options and ETF Plays for NVO’s Volatile Outlook
• 200-day average: 77.64 (far above current price)
• RSI: 75.85 (overbought, suggesting potential reversal)
• MACD: -1.81 (bearish divergence)
• Bollinger Bands: NVO at 54.87, near the lower band (44.68), indicating oversold territory

NVO’s technicals paint a bearish picture, with RSI overbought and MACD negative. The stock is trading near its 52-week low and below all major moving averages, suggesting a high probability of further downside. The Defiance Daily Target 2X Long NVO ETF (NVOX), down 5.2%, reflects leveraged bearish sentiment. Key support levels at $50.64–51.17 and resistance at $67.93–69.25 define the near-term range. A break below $50.64 could trigger a test of the 52-week low.

Top Options Plays:
• NVO20250905P54 (Put, $54 strike, 2025-09-05):
- IV: 35.92% (moderate)
- Leverage Ratio: 56.52%
- Delta: -0.3889 (moderate sensitivity)
- Theta: -0.0299 (modest time decay)
- Gamma: 0.1121 (high sensitivity to price swings)
- Turnover: 11,461 (liquid)
- Payoff (5% downside): $0.73 per contract (max gain if NVO drops to $52.12).
This put option offers a balanced risk-reward profile, with high gamma amplifying gains if NVO breaks below $54.

• NVO20250905P53 (Put, $53 strike, 2025-09-05):
- IV: 35.81% (moderate)
- Leverage Ratio: 89.88%
- Delta: -0.2798 (moderate sensitivity)
- Theta: -0.0311 (modest time decay)
- Gamma: 0.0987 (high sensitivity to price swings)
- Turnover: 5,328 (liquid)
- Payoff (5% downside): $1.73 per contract (max gain if NVO drops to $52.12).
This contract provides higher leverage and a larger payoff potential, ideal for aggressive bearish bets.

Action: Aggressive bears should prioritize NVO20250905P53 for its high leverage and liquidity. If NVO breaks below $50.64, consider rolling into lower-strike puts.

Backtest Novo Nordisk Stock Performance
The backtest of Novo Nordisk's (NVO) performance after an intraday plunge of at least -3% shows favorable short-to-medium-term gains. The 3-day win rate is 57.89%, with an average return of 0.40% over that period. The 10-day win rate is higher at 61.40%, with an average return of 0.94%. Over 30 days, the win rate is 60.88%, with an average return of 1.96%. The maximum return during the backtest was 3.65%, which occurred on day 57, indicating that NVO tends to recover well from significant intraday declines.

NVO at Crossroads – Legal Risks and Sector Shifts Demand Immediate Attention
Novo Nordisk’s near-term outlook is clouded by legal liabilities and competitive threats. The stock’s technical breakdown and bearish options activity suggest further downside, with key support at $50.64. Meanwhile, Eli Lilly’s 4.16% surge underscores the sector’s shift toward oral GLP-1 solutions. Investors should monitor NVO’s legal developments and the pace of market share erosion. For now, the NVO20250905P53 put offers a compelling short-side play, while the broader sector’s bifurcation favors LLY’s innovation-driven momentum. Watch for a breakdown below $50.64 or a reversal in options sentiment to signal the next move.