Novo Nordisk (NVO Quick QuoteNVO - Free Report) shares have gained 13.9% in the past month. Several factors related to the company’s pipeline, regulatory updates and sector-specific developments have contributed to the much-awaited uptrend in the stock price. A key catalyst was Novo Nordisk’s recent $2.2 billion exclusive global collaboration and licensing deal with Septerna for developing and commercializing oral small-molecule medicines for treating obesity, type II diabetes (T2D) and other cardiometabolic diseases. With this collaboration deal, Novo Nordisk aims to expand its presence in the highly competitive obesity treatment market.

Novo Nordisk faces significant competition in the diabetes and obesity care market from its arch-rival Eli Lilly (LLY Quick QuoteLLY - Free Report) , which markets its tirzepatide injections, Mounjaro for T2D, and Zepbound for obesity. To tackle the same and to diversify from its injectable GLP-1 products, including Wegovy and Ozempic (semaglutide), NVO is rapidly developing new obesity treatments to stay ahead, especially in the lucrative U.S. market.

Earlier this month, the FDA accepted for review Novo Nordisk’s regulatory application seeking the approval of oral semaglutide 25 mg for obesity. A final decision from the regulatory body is expected around the turn of the year. Oral obesity pills are easier to use compared to injections, which can improve patient adherence.

Meanwhile, CVS Caremark, a major pharmacy benefit manager, recently announced that it would make Novo Nordisk’s Wegovy its preferred GLP-1 therapy for weight loss, effective July 1. NVO also announced partnerships with telehealth providers Hims & Hers Health to offer Wegovy at a discounted price to cash-paying patients. These are likely to give the company a commercial advantage over Lilly in the obesity market, contributing to the share price increase.

From a macroeconomic perspective, the broader market rally amid easing of trade tensions between the United States and China also contributed to drug stocks’ rise.

However, investors are advised not to jump to conclusions regarding acquiring/retaining the stock in their portfolio without considering the full spectrum of information available on Novo Nordisk. The company has faced several pipeline setbacks in the recent past. The competition in the obesity marketplace has also heated up significantly in the past couple of years, which threatens NVO’s prowess in the market. Let’s dig deeper and understand the company’s strengths and weaknesses to better understand how to play the stock after the recent price rise.

Semaglutide - NVO’s Growth Engine

NVO’s success in the past few years is underscored by its marketed semaglutide (GLP-1 agonist) medicines.

The company has a strong presence in the Diabetes care market, with one of the broadest diabetes portfolios in the industry. Its global diabetes value market share as of March-end stands at 33.3%, fueled by Rybelsus, Ozempic and Victoza, putting up a strong performance. Novo Nordisk continues to be the global market leader in the GLP-1 segment, with around 54% value market share as of the end of the first quarter of 2025.

Wegovy is a significant contributor to Novo Nordisk's revenues. Wegovy revenues surged 83% to DKK 17.4 billion in first-quarter 2025 due to strong prescription growth, driving higher revenues and profits. Additionally, Ozempic sales are also contributing positively to overall revenues. The company has also been investing heavily to expand its manufacturing capacity as part of its strategic move to entrench its diabetes and obesity care market leadership for its GLP-1 products.

NVO’s Label Expansion Plans to Boost Demand

Novo Nordisk is pursuing new indications for semaglutide, including label expansions for Wegovy in additional cardiovascular conditions and for Ozempic in T2D patients with chronic kidney disease. It has also filed regulatory applications for Rybelsus to prevent serious cardiac events in T2D patients in both the United States and the EU, and is investigating semaglutide’s potential in metabolic dysfunction–associated steatohepatitis. These efforts could expand the eligible patient population for semaglutide.

Beyond diabetes and obesity, Novo Nordisk is diversifying its portfolio by developing Mim8 for hemophilia A, with plans to submit it for regulatory approval soon. Alhemo (concizumab) has been approved in the EU for treating haemophilia A or B with inhibitors. Alhemo is not approved in the United States.

Recent Pipeline and Regulatory Setbacks

Despite the minor stock price recovery in the past month, NVO’s pipeline and regulatory setbacks have resulted in the stock crashing 33.7% in the past six months.

The company reported disappointing data from two late-stage studies for its next-generation subcutaneous obesity candidate, CagriSema, a follow-up drug to Wegovy. In these studies, CagriSema demonstrated a lower-than-expected reduction in body weight.

Last month, Medicare announced that it will not cover costly weight-loss drugs, such as NVO’s Wegovy (semaglutide) and Lilly’s Zepbound (tirzepatide), as obesity remains unclassified as a disease. Consequently, these medications, often viewed as cosmetic, may become less accessible to patients.

Competition Heating Up in the Obesity Space

Competition in the obesity market is heating up as the obesity market is expected to expand to $100 billion by 2030, according to data from Goldman Sachs. Lilly and Novo Nordisk presently dominate the market.

Lilly has also been taking significant strides in the development of oral therapies for obesity, effectively putting pressure on Novo Nordisk. In April 2025, LLY reported first phase III success for its oral GLP-1 candidate, orforglipron, in lowering blood glucose and promoting weight loss in T2D patients. Lilly’s orforglipron has also shown significant weight reduction potential in the late-stage study.

Several other companies like Amgen (AMGN Quick QuoteAMGN - Free Report) and Viking Therapeutics (VKTX Quick QuoteVKTX - Free Report) are also making rapid progress in the development of GLP-1-based candidates in their clinical pipeline. Amgen has begun a broad phase III program on its dual GIPR/GLP-1 receptor agonist, MariTide, across obesity, obesity-related conditions and T2D, with the first two phase III studies initiated in March. Viking Therapeutics’ dual GIPR/GLP-1 receptor agonist, VK2735, is being developed both as oral and subcutaneous formulations for the treatment of obesity. Phase III studies with the subcutaneous formulation of VK2735 are on track to begin in the second quarter.

AMGN and VKTX’s products can pose strong competition to Mounjaro/Zepbound and NVO’s Ozempic/Wegovy in the future.

NVO’s Stock Price, Valuation, Estimates

Year to date, Novo Nordisk shares have plunged 23.1% compared with the industry’s decline of 8.8%. The company has also underperformed the sector and the S&P 500 during the same time frame, as seen in the chart below. The stock is currently trading below both its 50 and 200-day moving averages.

NVO Stock Underperforms the Industry, Sector & the S&P 500

Image Source: Zacks Investment Research

Novo Nordisk is trading at a slight premium to the industry, as seen in the chart below. Going by the price/earnings ratio, the company’s shares currently trade at 15.78 forward earnings, which is higher than 14.06 for the industry. However, the stock is trading much below its five-year mean of 29.25.

NVO Stock Valuation

Image Source: Zacks Investment Research

Earnings estimates for 2025 have improved from $3.80 to $3.85 per share over the past 30 days. During the same time frame, Novo Nordisk’s 2026 earnings per share estimates have improved from $4.60 to $4.65.

NVO Estimate Movement

Image Source: Zacks Investment Research

The stock’s return on equity on a trailing 12-month basis is 80.95%, which is higher than 32.84% for the large drugmaker industry, as seen in the chart below.

NVO Return on Equity

Image Source: Zacks Investment Research

Here’s How to Play NVO Stock

Novo Nordisk, currently carrying a Zacks Rank #3 (Hold), has the potential to boost shareholders’ wealth in the future. Despite past pipeline and regulatory setbacks, coupled with macroeconomic uncertainties, we remain confident that NVO is a good stock to retain. The company operates in a lucrative market that is rapidly expanding. Its strong year-over-year revenues and profits, fueled by rising demand for Wegovy and Ozempic, suggest long-term potential. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company is actively working to expand the approved uses of its key products, Wegovy, Ozempic, and Rybelsus, which could significantly increase the eligible patient pool and drive future revenues. The FDA's removal of semaglutide from its shortage list and recent price reductions for Wegovy are also expected to improve access and support sales growth.

However, Eli Lilly remains a formidable adversary in the obesity market space, which threatens NVO’s market share. Several large drugmakers like Roche, Merck and AbbVie are also looking to enter into the obesity space by in-licensing obesity candidates from smaller biotechs, which could significantly increase competition in the market. Novo Nordisk is developing new obesity treatments to retain its edge, especially in the U.S. market.

Hence, we can conclude that the recent uptrend in the stock price can be interpreted as an improvement in conditions for Novo Nordisk, as is supported by the upward estimate revisions. Investors who already own the stock should hold their position for long-term gains. Short-term investors are, however, advised to steer clear of the stock to avoid near-term volatility.