Does Novo Nordisk’s Recent Recovery Signal More Gains Ahead in 2025?

Thinking about what to do with Novo Nordisk's stock right now? You are definitely not alone. Whether you already own shares or are eyeing a new position, the past year has been a real rollercoaster. After peaking with impressive gains over the last five years, up nearly 84%, the stock has dropped significantly in 2024, with year-to-date returns down more than 34%. Despite the rough patch, the action in recent weeks shows signs of renewed optimism, with the stock bouncing back by about 8.7% over the last seven days.

News from the broader pharma sector and shifts in risk perception have moved the needle for Novo Nordisk lately, as investors digest both new clinical trial updates and ongoing debates about drug pricing. At the same time, analyst targets suggest there may be robust upside ahead: the stock trades at a 27.9% discount to consensus price targets, and valuation models hint at even deeper long-term undervaluation. One intrinsic approach points to a hefty 70.1% discount to fair value.

By our scorecard, Novo Nordisk gets a value score of 5 out of 6 on standard undervaluation checks, which is very compelling for investors looking for bargains in big pharma. Up next, we will break down exactly which valuation frameworks make the case for the stock, and share an even better way to figure out what Novo Nordisk is truly worth by the time you reach the end of this article.

Novo Nordisk delivered -57.6% returns over the last year. See how this stacks up to the rest of the Pharmaceuticals industry.

Approach 1: Novo Nordisk Cash Flows

A Discounted Cash Flow (DCF) model projects a company’s future free cash flows and then discounts them to a single, present-day value. This approach helps estimate what a business is really worth right now, based on its cash-generating ability after all expenses and investments are accounted for.

Novo Nordisk’s current Free Cash Flow stands at $68.36 billion, with growth projected to continue over the coming years. Analyst forecasts suggest that by 2029, annual Free Cash Flow could reach about $157.67 billion. The ten-year trajectory, supported by annual estimates from respected analysts and reasonable growth assumptions, underpins a robust long-term outlook.

Based on these projections, the DCF model arrives at an intrinsic fair value of $190.67 per share. When compared to Novo Nordisk’s current market price, the stock appears to be 70.1% undervalued. This substantial margin suggests that the market may be overlooking some key strengths or future growth potential.

Result: UNDERVALUED

Our DCF analysis suggests Novo Nordisk is undervalued by 70.1%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: Novo Nordisk Price vs Earnings

The price-to-earnings (PE) ratio is a highly relevant tool for valuing profitable companies like Novo Nordisk, as it connects a company’s current share price with its actual earnings. This makes it a widely trusted measure for determining whether a stock’s valuation is justified by its real, cash-producing business.

What is considered a “normal” or “fair” PE ratio can shift with investor expectations. Companies with faster growth prospects, less risk, or market leadership tend to command higher PE ratios, while slower-growing or riskier businesses often trade at lower multiples. As a result, comparing Novo Nordisk’s PE with competitors and the industry provides valuable context.

Currently, Novo Nordisk trades at a PE ratio of 14.56x. This is well below the average for its closest peers, which is 24.49x, and also below the pharmaceutical industry average of 19.65x. Simply Wall St’s proprietary Fair Ratio for Novo Nordisk, which factors in its earnings growth, profit margins, risk profile, and scale, stands at 33.63x. This significant difference suggests that the company is trading at a notable discount compared to what the market might expect, given its strong fundamentals and future outlook.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Novo Nordisk Narrative

Instead of relying only on financial ratios, you can now build a Narrative—a straightforward way to capture your perspective on Novo Nordisk by connecting its real-world story to a financial forecast and resulting fair value estimate.

A Narrative lets you link details like new drug launches, competition, or regulatory changes directly to numbers such as future revenue, earnings, and margins. These then translate into a custom fair value for the stock.

Within the Simply Wall St platform, Narratives make this process accessible. You can easily compare your view with those of millions of investors and see exactly how shifts in the company’s journey may signal a buy or sell opportunity by showing how your Fair Value compares to the current Price.

Since Narratives update whenever new news, analysis, or company results come in, you get a dynamic and living view of what the business is worth, rather than an outdated static number.

For example, with Novo Nordisk, one investor’s Narrative might forecast robust 16% annual growth and a fair value around $120. Another might take a more cautious view, estimating lower growth and landing at a $69 valuation.

Do you think there's more to the story for Novo Nordisk? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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