Valuation reset, but the GLP-1 franchise (and optionality) remains intact

Novo Nordisk (NVO) has continued to face a tougher near-term backdrop, but the longer-term investment case remains intact. Management has narrowed 2025 guidance to 8–11% sales growth and 4–7% operating profit growth (constant exchange rates), explicitly citing intensifying competition and pricing pressure in both diabetes and obesity. The company is also absorbing DKK 8bn in restructuring costs and maintaining elevated capex to expand supply capacity.

While sentiment is weak and valuation has compressed to roughly mid-teens forward earnings, Novo has added an important de-risking catalyst: oral Wegovy (a GLP-1 obesity pill) has been FDA-approved and launched in the US, which could expand access and improve adherence as the market matures. At the same time, Novo is using affordability levers in the cash channel, which may support volume but increases the risk of ongoing net-price/margin pressure.

We view the likely industry end-state as an oligopoly (with Novo and Eli Lilly as the primary beneficiaries), where competition is intense but sustained value-destructive price wars are not the base case. Importantly, today’s valuation appears to underweight the “embedded options” in GLP-1s beyond weight loss — including broader cardio-metabolic indications — even as policy risk becomes more concrete (Novo has accepted Medicare drug price negotiation for semaglutide products effective 2027).

Valuation: We estimate fair value at ~$95 per ADR (base-case range $90–$100), reflecting a more competitive, more price-sensitive regime than the peak GLP-1 narrative, but also acknowledging the durability of the franchise and the expanding product/indication set.