Novo Nordisk (NVO Quick QuoteNVO - Free Report) shares have climbed 10% in the past month, supported by a mix of certain internal factors and positive market catalysts, which boosted investor confidence.

In early September, Novo Nordisk reported positive real-world data from its REACH study, showing that its blockbuster diabetes injection, Ozempic, outperformed Eli Lilly’s (LLY Quick QuoteLLY - Free Report) Trulicity in reducing cardiovascular risks among type II diabetes (T2D) patients. Ozempic lowered the risk of major adverse cardiovascular events by 23% and remains the only GLP-1 therapy approved to reduce kidney disease progression and cardiovascular death in patients with diabetes and chronic kidney disease.

Novo Nordisk also announced a major restructuring program aimed at streamlining operations and reinvesting in its core diabetes and obesity businesses. The plan includes reducing its global workforce by about 9,000 employees, targeting annualized savings of around DKK 8 billion by 2026. Investor sentiment further improved across the pharmaceutical sector following Pfizer’s landmark agreement with the Trump administration in September. The deal, which addresses long-standing concerns over drug pricing and tariffs while incentivizing U.S. manufacturing, has fueled optimism that other major drugmakers could benefit from similar policy support. This favors NVO, which has been investing heavily to expand its U.S. production capacity for its GLP-1 drug portfolio, positioning the company to capitalize on potential regulatory and tariff advantages.

However, caution is warranted as Novo Nordisk continues to face competitive pressure from Eli Lilly’s tirzepatide-based drugs, slower obesity market growth, and regulatory setbacks. LLY markets its tirzepatide medicines as Mounjaro for T2D and Zepbound for obesity. Despite being on the market for less than three years, both drugs have become LLY’s key top-line drivers. In the first half of 2025, they generated combined sales of $14.7 billion, accounting for 52% of Eli Lilly’s total revenues.  

After cutting its 2025 sales and profit outlook, Novo Nordisk now faces earnings risk and execution challenges despite its strong fundamentals and advancing pipeline. While its long-term potential remains tied to the large, underpenetrated obesity market, near-term headwinds make the stock a risky bet at current levels. Let’s dig deeper and understand the company’s strengths and weaknesses to understand how to play the stock.

Semaglutide – Still NVO’s Primary Top-Line Driver

Novo Nordisk’s success in recent years has been driven by the sales of Ozempic and Rybelsus (oral) for T2D, and Wegovy for obesity. Despite recent market turmoil, the company holds a strong position in diabetes care, with one of the industry's broadest portfolios.

Wegovy is a major revenue driver, recording sales of $5.41 billion (DKK 36.9 billion) during the first half of 2025, up 78% year over year on strong prescription growth. Ozempic also continues to boost overall revenues. As of July 1, CVS Caremark, a major pharmacy benefit manager, has designated Wegovy as its preferred GLP-1 therapy for weight loss.

Novo Nordisk is expanding semaglutide's reach through new indications. Wegovy is now approved for reducing major cardiovascular events, easing HFpEF symptoms, and relieving osteoarthritis-related knee pain in obesity.

The FDA is also reviewing Novo Nordisk’s application for a 25 mg oral semaglutide for obesity, with a decision expected by year-end. Oral pills could boost adherence over injections. Potential approval would give Novo Nordisk a notable advantage as the sole manufacturer of a marketed oral obesity pill, positioning it to capture significant market share. Rybelsus’ label in the EU has been expanded to include cardiovascular benefits in diabetes patients. A similar filing for Rybelsus is currently under review in the United States, with a decision expected by year-end. A 7.2 mg Wegovy dose, showing up to 25% weight loss in the STEP UP study, is under EU review. Label expansion is also being sought for Ozempic in treating peripheral artery disease in the United States and the EU.

NVO Expands Footprint in Rare Diseases and Liver Care

Beyond its GLP-1 portfolio, Novo Nordisk is broadening its presence in rare diseases. The company has submitted a regulatory filing seeking approval for Mim8 in hemophilia A in the United States and has secured EU approval for Alhemo to treat hemophilia A and B with inhibitors. Alhemo is also under EU review for patients without inhibitors. In the United States, Alhemo is already approved for both hemophilia A and B, with or without inhibitors.

The FDA recently granted accelerated approval to Wegovy as the first GLP-1 therapy to treat noncirrhotic metabolic dysfunction-associated steatohepatitis with moderate-to-advanced liver fibrosis. This marked a significant milestone in liver care by offering patients a treatment that can both halt disease activity and reverse liver damage.

NVO Focuses on Next-Generation Drugs for Obesity

Novo Nordisk is also developing several next-generation obesity candidates in its pipeline, especially targeting the lucrative U.S. market. The most advanced weight loss candidate in Novo Nordisk’s pipeline is CagriSema, a fixed-dose combination of a long-acting amylin analog, cagrilintide, and Wegovy. The company is planning its regulatory submission in 2026. NVO is also gearing up to launch a dedicated late-stage program evaluating cagrilintide as a monotherapy for obesity.

Novo Nordisk is also developing a small-molecule oral CB1 inverse agonist, monlunabant, in a mid-stage study. The company is currently gearing up to advance amycretin, an investigational unimolecular GLP-1 and amylin receptor agonist, for weight management into late-stage development. The phase III program on amycretin is planned to be initiated during the first quarter of 2026. Recently, the company also signed a $2.2 billion deal with Septerna for developing and commercializing oral small-molecule medicines for treating obesity, diabetes, and other cardiometabolic diseases.

NVO’s Stock Price, Valuation, Estimates

Year to date, Novo Nordisk shares have lost 30.7% against the industry’s 7.9% growth. The company has also underperformed the sector and the S&P 500 during the same time frame, as seen in the chart below.

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

Image Source: Zacks Investment Research

Novo Nordisk is trading at a discount to the industry, as seen in the chart below. Going by the price/earnings ratio, the company’s shares currently trade at 14.86 forward earnings, which is lower than 15.86 for the industry. 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 deteriorated from $3.89 to $3.73 per share over the past 60 days. During the same time frame, Novo Nordisk’s 2026 earnings per share estimates have declined from $4.24 to $4.09.

NVO Estimate Movement

Image Source: Zacks Investment Research

Here’s How to Play NVO Stock

The recent share price rally for Novo Nordisk, currently carrying a Zacks Rank #5 (Strong Sell), appears more sentiment-driven than fundamentally supported, as the company faces mounting operational and competitive challenges. While recent real-world data for Ozempic and ongoing restructuring initiatives have temporarily lifted investor confidence, underlying headwinds remain significant. Slower-than-expected Wegovy uptake in the United States, uneven international launches, and aggressive competition from Eli Lilly’s tirzepatide-based drugs continue to weigh on market share and earnings visibility. Novo Nordisk’s decision to cut its 2025 sales and profit outlook underscores these pressures, while the 9,000 planned job reductions and related restructuring costs add further uncertainty. In the near term, execution risk, pricing headwinds and mounting competition in the GLP-1 landscape make the stock unattractive for traders seeking quick gains. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Competition in the obesity treatment market is intensifying as the space, projected by Goldman Sachs to reach $100 billion by 2030, attracts new contenders beyond leaders Eli Lilly and Novo Nordisk. Amgen (AMGN Quick QuoteAMGN - Free Report) and Viking Therapeutics (VKTX Quick QuoteVKTX - Free Report) are advancing GLP-1–based therapies to challenge the incumbents. Amgen has launched a broad phase III program for its dual GIPR/GLP-1 agonist, MariTide, targeting obesity and diabetes. Meanwhile, Viking Therapeutics is progressing two late-stage studies of its injectable VK2735 and reported mixed mid-stage data on the oral version in August, prompting a sharp stock decline.

From a longer-term perspective, the investment case for Novo Nordisk remains equally weak at present. Despite its established leadership in diabetes care and ongoing pipeline efforts in next-generation obesity and rare disease treatments, the company’s growth trajectory is flattening amid rising competition, margin compression and regulatory hurdles. With profitability under strain and new product catalysts still away from contributing meaningfully, there is a limited risk-reward profile at present. Until Novo Nordisk delivers consistent operational execution, demonstrates tangible post-restructuring profitability, and regains meaningful market share traction, investors — both short- and long-term — would be better off avoiding the stock.