Novo Nordisk: great business, but expectations matter
Novo Nordisk is often described as a “no-brainer” stock, but in my opinion it’s a perfect example of how an exceptional business can still carry meaningful investment risk — mainly because of expectations.
The company is a global leader in diabetes and obesity treatments, with blockbuster drugs like Ozempic and Wegovy driving explosive revenue and profit growth. From an operational standpoint, Novo Nordisk is executing extremely well: strong pricing power, high margins, and a dominant competitive position in a market with long-term structural tailwinds.
However, this success is also fully reflected in the stock price. Novo Nordisk trades at premium valuation multiples, implying that growth must remain strong and consistent for many years. Any slowdown in demand, increased competition, regulatory pressure or reimbursement issues could quickly change market sentiment.
Another key point is concentration risk. A large part of current growth is tied to GLP-1 drugs. While the pipeline is solid, reliance on a few flagship products makes the story more vulnerable than it appears at first glance.
In short, Novo Nordisk is a fantastic company, but not necessarily a “safe” investment at any price. From today’s levels, returns will likely depend less on business quality — which is outstanding — and more on whether future growth can continue to beat already very optimistic expectations.
For me, Novo Nordisk represents a classic case of high-quality, high-expectations investing.
❓❔ At current valuations, do you see Novo Nordisk as a long-term compounder, or is most of the upside already priced in?
