Novo Nordisk's Potential Revival: Lower Prices and a Look Ahead

Novo Nordisk's stock has declined 70% to $45, and this could be a buying opportunity. The company is in a struggling sector, but lower prices may be a cure. The stock is around the level where a significant rally started in 2022-2024.

Novo Nordisk's (NVO) stock has plummeted 70% to $45, presenting a significant decline that has raised eyebrows among investors. The pharmaceutical giant, known for its diabetes and obesity treatments, has faced multiple challenges, including regulatory pressures and market competition. However, this substantial drop could signal a potential buying opportunity, given the company's strong fundamentals and long-term growth prospects.

The Struggling Sector

Novo Nordisk operates in an unloved sector, with healthcare (XLV) being the weakest sector in the S&P500 this year. The sector's struggles are compounded by regulatory pressures, such as the Inflation Reduction Act and executive orders from the Trump administration, which have pushed for drug price reductions. This has significantly impacted profit margins, with stocks like United Health (UNH) and Regeneron (REGN) falling over 50%, and even high-flying stocks like Eli Lilly (LLY) experiencing over 30% declines from their peaks last year [1].

Core Problems and Market Reaction

Novo Nordisk has been trending lower for over a year, with the latest earnings call underlining core problems. The company expects sales and operating profit growth to be 3 and 5 percentage points lower than at constant exchange rates, respectively, based on exchange rates from 31st July 2025. This slowdown is driven by lower growth expectations for its key products, such as Wegovy in the U.S. and Ozempic in the U.S. GLP-1 diabetes market [1].

Despite these challenges, Novo Nordisk remains a profitable company with healthy financial results. However, markets are forward-looking and have reacted to potential slowdowns, particularly in crucial areas like GLP-1 diabetes and obesity care, which are the company's main revenue streams [1].

Support Level and Long-Term Outlook

The stock has now declined to $45, around the level where the significant 2022-2024 rally started. This level could act as support, signaling that the majority of the drop has played out. Historically, stocks tend to stabilize once the boom phase is unwound, and further lows may bounce back above $47.50 [1]. The long-term trend for Novo Nordisk is a very healthy one, with the stock expected to recover back to the $148 peak in around 4 years, representing a 200% gain from the current level [1].

Positive Drivers and Future Prospects

Novo Nordisk has several areas of growth potential. The company is expected to be the first to have a weight loss pill, the oral version of Wegovy, with an FDA decision anticipated in Q4 2025. This could be a significant win for Novo Nordisk, putting Wegovy back as the leading obesity care treatment. Additionally, the company is expanding its product offerings in many countries outside the U.S., with Wegovy launched in around 35 countries [1].

Conclusion

Novo Nordisk's stock decline to $45 presents a potential buying opportunity. The company's struggles are sector-specific, but valid concerns exist regarding the sales growth of its leading products. However, these issues could have been "cured" by lower prices and are mostly priced in now. The $47.50 level, which acted as support in 2021 and 2022, could signal stabilization and an eventual return to the long-term trend. With strong fundamentals and growth prospects, Novo Nordisk could return to its 2024 peak by the end of the decade.

References

[1] https://seekingalpha.com/article/4813190-cure-novo-nordisk