💡 Core Investment Thesis
- GLP-1 Dominance: Global leader in obesity/diabetes treatments (Ozempic® and Wegovy®), capturing structural demand from rising obesity rates (44% U.S. prevalence).
- Near-Term Volatility: U.S. compounded drug competition and tariff uncertainty create headwinds, offset by FDA action and pipeline expansion.
- Attractive Valuation: Trading at 19× P/E (vs Eli Lilly’s 58×), offering relative value in high-growth obesity market.
📊 Financial Health & Performance
Q1 2025 Highlights
- Revenue: DKK 78.1bn ($11.9bn, +18% YoY), driven by obesity care sales (+65% YoY).
- Profitability: Operating profit DKK 38.8bn (+20% YoY), beating estimates.
- 2025 Guidance:
- Sales growth lowered to 13–21% (from 16–24%).
- Operating profit growth trimmed to 16–24% (from 19–27%).
- Balance Sheet: Robust $9.8bn operating cash flow funding U.S. production expansion.
Key Headwinds
- Wegovy® sales below expectations due to U.S. compounded alternatives.
💷 Dividends & Shareholder Returns
- Current Yield: 1% (modest but growing).
- Coverage: Strong free cash flow supports consistent payouts.
- Capital Allocation: Prioritising $4.1bn U.S. manufacturing capacity to mitigate supply/tariff risks.
🌍 Governmental & Regulatory Exposure
Catalysts
- FDA Action: Ban on compounded semaglutide (May 2025) reclaiming market share.
- Tariff Reprieve: 50% U.S. duty on EU drugs postponed to July 2025, avoiding immediate cost shock.
- Pipeline Momentum: Oral obesity drug under FDA review; next-gen CagriSema filing in 2026.
Risks
- U.S. Trade Policy: 50% tariff implementation in July could erode margins by 10–15%.
- Medicare Pricing: Inflation Reduction Act negotiations may pressure long-term drug pricing.
📈 Growth Projections & Valuation
Short-Term (2025–2026)
- Price Target: $92.42 average (33% upside from $71.50).
- Catalysts:
- Compounded drug phaseout boosting H2 prescriptions.
- CVS Caremark exclusivity expanding Wegovy® access.
Long-Term (2030–2036)
- Market Potential: Global obesity drug market projected at $105–144bn by 2030.
- Upside Target: $197.75 by 2036 (177% upside) via oral GLP-1 adoption and pipeline expansion.
Valuation Metrics
- Share Price: $71.50
- P/E (TTM): 19× (Eli Lilly: 58×)
- Dividend Yield: 1%
- Analyst Upside: 33% consensus (range: $61–$138.53)
⚠️ Key Risks
Compounded Drug Persistence: 30% U.S. obesity patients still use alternatives post-FDA ban.
Pipeline Delays: CagriSema filing pushed to 2026; oral GLP-1 approval timeline uncertain.
Competition: Eli Lilly’s Zepbound® gaining share; Viking Therapeutics advancing rivals.
Tariff Impact: July duty could raise U.S. consumer costs by 15–20%.
🎯 Investment Recommendation
Accumulate Below $70 for Long-Term Growth
- Near-Term Catalyst: Q2 prescription data (August 2025) confirming market share recovery.
- Entry Strategy: Buy dips below $70; hedge with puts if U.S.-EU tariff talks stall.
- Total Return Scenarios:
- Base Case (60%): 33% upside + 1% yield by mid-2026.
- Bull Case (25%): $138+ with tariff resolution/CagriSema acceleration.
- Bear Case (15%): $61 if competition intensifies.
Bottom Line: Novo Nordisk remains a high-conviction obesity play with unshakeable long-term demand (1bn+ obese globally). Near-term volatility is a buying opportunity for patient investors.
Does Novo’s 19× P/E justify its leadership vs Lilly’s 58× premium?
Can FDA action fully eliminate compounded GLP-1 competition?
How will U.S. tariffs impact Novo’s $4.1bn manufacturing strategy?
Disclaimer: Not financial advice. Conduct your own due diligence.