Novo Nordisk Sees Value Investors Buying Dip Amid Market Share Erosion Concerns

Novo Nordisk's market share is being eroded by competitors in the weight loss segment, particularly Eli Lilly. As a result, the author previously rated Novo Nordisk as a Strong Sell. Despite this, value investors are buying the dip, which the author finds frustrating.

Novo Nordisk A/S (NVO) has been facing significant market share erosion in the weight loss segment, particularly from Eli Lilly (LLY). Despite this challenge, the company's stock has seen a rebound following recent developments. In a previous analysis, Victor Golmer rated Novo Nordisk as a Strong Sell due to market share erosion from competitors like Lilly [1]. However, recent events have led some value investors to "buy the dip," which Golmer finds frustrating.

On July 1, 2025, shares of Novo Nordisk rose over 7% after Eli Lilly's trial results for its weight-loss pill, orforglipron, showed it to be less effective than Novo Nordisk's blockbuster drug, Wegovy. Lilly's trial demonstrated an average weight loss of 12.4% after 72 weeks, compared to Novo's 14.9% [2]. This underperformance of Lilly's drug has boosted Novo Nordisk's shares, as investors see a potential reduction in competition.

The market for weight-loss drugs is expected to reach $150 billion by the early 2030s, driven by increasing obesity rates. According to the Center for Disease Control, two out of five adults in the U.S. are obese, exposing them to long-term health risks such as type 2 diabetes. Novo Nordisk has been at the forefront of anti-obesity drug development, with products like Ozempic and Wegovy. Wegovy, in particular, has been a significant revenue driver, with revenue surging 67% year-over-year in the second quarter of 2025 [3].

Despite these positive developments, Novo Nordisk has faced headwinds. The company's revenue growth has slowed, and it has seen a drop in market share for its weight-loss drugs, including Wegovy. This has led to a downward pressure on the company's share price. However, the company's profitability remains strong, with operating income surging 86% in the last year [3].

Golmer believes that investors are overly bearish on Novo Nordisk and that the company's valuation is now so low that it embeds a large safety margin. He estimates that Novo Nordisk's shares could re-price to a 20.0X earnings multiplier, representing a 57% upside revaluation potential [3].

Risks include increased competition and the potential for a drop-off in operating income. However, obesity trends favor investments in weight-loss drug companies, and Novo Nordisk's profitability provides a buffer against further downside.

References:
[1] https://seekingalpha.com/article/4812191-novo-nordisk-watching-value-investors-buy-the-dip-hurts-my-eyes
[2] https://investorshub.advfn.com/market-news/article/14317/novo-nordisk-shares-climb-for-second-day-as-lillys-obesity-pill-falls-short-of-wegovy-in-trial
[3] https://seekingalpha.com/article/4812157-novo-nordisk-enough-is-enough