Reassessing Novo Nordisk After a 55% Slide and Strong GLP 1 Growth Prospects

• If you have been wondering whether Novo Nordisk is starting to look like a bargain after its big run in recent years, you are not alone. This breakdown is designed to cut through the noise.
• Despite falling 55.0% over the last year and 45.2% year to date, the stock is still up a solid 47.2% over five years. This tells us the market has been rapidly reassessing both its growth potential and risk profile.
• Recent headlines have focused on Novo Nordisk's continued dominance in diabetes and obesity treatments, alongside ongoing expansion of its blockbuster GLP 1 drug franchise into new markets and indications. At the same time, investors are paying attention to regulatory updates and competitive moves in weight loss therapies, which helps explain some of the volatility in the share price.
• On our numbers, Novo Nordisk scores a strong 5/6 valuation check for being undervalued across most metrics. Next we will unpack what different valuation approaches say about the stock today, before finishing with an even more powerful way to think about its long term value story.

Find out why Novo Nordisk's -55.0% return over the last year is lagging behind its peers.

Approach 1: Novo Nordisk Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth by projecting its future cash flows and then discounting them back into today’s money. For Novo Nordisk, the model starts with last twelve month free cash flow of roughly DKK 67.6 billion, already a substantial base given its strong diabetes and obesity franchises.

Analysts expect free cash flow to keep rising, with projections climbing into the DKK 120 billion to DKK 210 billion range over the coming decade as the GLP 1 portfolio expands and matures. Simply Wall St uses analyst estimates for the next few years and then extrapolates further growth to build a full 2 Stage Free Cash Flow to Equity model.

On this basis, the DCF model estimates an intrinsic value of about $153.88 per share. Compared with the current share price, this implies the stock trades at roughly a 68.8% discount. This suggests the market is pricing in far weaker long term cash generation than the model assumes.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Novo Nordisk is undervalued by 68.8%. Track this in your watchlist or portfolio, or discover 908 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Novo Nordisk.

Approach 2: Novo Nordisk Price vs Earnings

For a mature, profitable business like Novo Nordisk, the price to earnings ratio is a straightforward way to judge value because it links the share price directly to the profits the company is already generating. In general, companies with faster, more reliable earnings growth and lower perceived risk deserve a higher normal or fair PE multiple, while slower growth or higher uncertainty should pull that multiple down.

Novo Nordisk currently trades on about 13.09x earnings, which sits meaningfully below both the Pharmaceuticals industry average of around 19.72x and the peer group average of roughly 16.25x. Simply Wall St also calculates a proprietary Fair Ratio of 31.14x for Novo Nordisk, an estimate of the PE multiple the market might typically pay given its earnings growth profile, margins, industry positioning, scale, and risk factors.

This Fair Ratio is more informative than a simple comparison with peers or the sector because it explicitly factors in how Novo Nordisk’s growth prospects and quality stack up, rather than assuming all pharma names deserve similar multiples. With the stock trading on 13.09x versus a Fair Ratio of 31.14x, this PE-based lens suggests the shares may be trading at a materially lower level than that fair value estimate.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Novo Nordisk Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, an approach that lets you attach a clear story and set of assumptions to the numbers behind a company. A Narrative is simply your viewpoint on Novo Nordisk’s future revenue, earnings, and margins, translated into a financial forecast and then into a Fair Value that you can directly compare with today’s share price. On Simply Wall St’s Community page, millions of investors use Narratives as an accessible tool to frame when they might buy or sell, by checking whether their Fair Value sits above or below the current price and by seeing how that gap changes over time. Narratives automatically update as new information, such as earnings or major news, flows in so your thesis stays connected to reality without constant manual tweaks. For example, some Novo Nordisk Narratives on the platform see fair value near $70 per ADR while others are closer to $160, reflecting very different expectations for GLP 1 growth, policy risk, and pipeline success.

Do you think there's more to the story for Novo Nordisk? Head over to our Community to see what others are saying!

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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