Novo (NVO Quick QuoteNVO - Free Report) shares have gained 4.3% over the past month, likely supported by improving investor sentiment around its obesity franchise, pipeline developments and better-than-expected third-quarter 2026 results. Adjusted operating profit rose 27% at constant exchange rates (CER), aided partly by a favorable year-ago comparison. More importantly, Novo raised its 2026 adjusted sales and operating profit growth outlook to a range of a 2% decline to a 2% increase, from a 6% decline to flat growth, reflecting higher GLP-1 sales expectations. The upbeat guidance likely helped bolster investor confidence.

Strong uptake of Wegovy pill also supported the momentum. The oral obesity drug generated DKK 5.39 billion in third-quarter sales, with cumulative U.S. prescriptions exceeding eight million since launch. Obesity Care sales increased 22% at CER, while the Wegovy franchise maintained more than 50% share of new patient starts in the branded U.S. obesity market. Continued international expansion and improving patient access could further support growth amid pricing pressures on injectable products.

Encouraging obesity pipeline developments may have also contributed to the positive sentiment. In October, post hoc phase III REDEFINE 1 data showed that CagriSema achieved an estimated 25% average weight loss among women at week 68 compared with 3% for placebo. Novo also reported encouraging REDEFINE 9 results, with a lower dose of CagriSema achieving 21% weight loss. These findings support the candidate's potential ahead of a possible U.S. launch in early 2027, subject to regulatory approval.

Nevertheless, Novo is not out of the woods yet, as intense competition from Eli Lilly (LLY Quick QuoteLLY - Free Report) , persistent pricing pressures and weakness in its diabetes franchise remain major concerns. Lilly continues to demonstrate strong commercial momentum, with its third-quarter 2026 revenues surging 39% year over year, driven by robust demand for Mounjaro [for type II diabetes (T2D)] and Zepbound (for obesity). Zepbound sales jumped 49%, underscoring the growing competitive threat to Wegovy in the injectable obesity market.

Lilly's newly launched oral obesity drug, Foundayo, also poses a challenge to the Wegovy pill, while broader treatment access could further intensify the rivalry. Moreover, CagriSema's failure to demonstrate non-inferiority to Zepbound in the phase III REDEFINE 4 study raises concerns about Novo's ability to differentiate its next-generation obesity treatment. Meanwhile, declining Ozempic sales and continued pricing erosion across its GLP-1 portfolio could limit revenue growth despite higher prescription volumes. To better assess the stock’s investment appeal, let us weigh Novo’s long-term opportunities against these near-term challenges.

Semaglutide Franchise Remains NVO’s Top-Line Backbone

As Ozempic, Wegovy and Rybelsus remain Novo’s primary top-line drivers, the company is pursuing broader indications and new formulations to sustain revenues and extend the commercial potential of the semaglutide franchise. Wegovy is also approved to reduce the risk of major cardiovascular events in certain adults with obesity or overweight and established cardiovascular disease. The company has also secured approvals for higher-dose Wegovy injections in the United States and Europe. At the same time, oral Wegovy for weight management is approved in the United States and the EU.

Novo is similarly seeking to expand semaglutide's reach in diabetes. Ozempic is approved in the United States to reduce the risk of kidney disease progression, kidney failure and cardiovascular death in adults with T2D and chronic kidney disease. Rybelsus is also approved in the United States to reduce the risk of major cardiovascular events in high-risk adults with T2D, while its European label includes cardiovascular benefits demonstrated in the SOUL study. Meanwhile, the U.S. launch of the reformulated Ozempic pill further strengthens Novo's oral diabetes franchise. Positive phase IIIa PIONEER TEENS data have also supported regulatory submissions for pediatric label expansions of Rybelsus in the EU and Ozempic pill in the United States. Potential approvals could help broaden the franchise's reach and support longer-term revenues.

NVO’s Competition Heating Up in the Obesity Space

The obesity space has drawn much of the spotlight over the past year because of the sizeable and still underpenetrated market opportunity. Smaller biotech firms, such as Viking Therapeutics (VKTX Quick QuoteVKTX - Free Report) and Structure Therapeutics (GPCR Quick QuoteGPCR - Free Report) , are also advancing GLP-1–based therapies to challenge the incumbents. Viking’s dual GIPR/GLP-1 RA, VK2735, is being developed in both oral and subcutaneous formulations for obesity. In October, Viking initiated the phase III SUNRISE program, comprising two late-stage studies evaluating oral VK2735 in adults with obesity or overweight, with and without T2D. Meanwhile, the candidate’s subcutaneous formulation is being evaluated in the ongoing phase III VANQUISH obesity program, with both studies fully enrolled and expected to be completed in 2027.

Structure Therapeutics is advancing aleniglipron, an orally administered small-molecule GLP-1 receptor agonist, for obesity. Encouraged by positive phase II ACCESS results, GPCR initiated the phase III ACCOMPLISH program in August 2026, comprising two late-stage studies evaluating aleniglipron for chronic weight management. The first patients have been dosed in the program, with top-line data expected in the second half of 2028.

NVO Expands Footprint in Rare Diseases and Liver Care

Beyond its GLP-1 portfolio, Novo is broadening its presence in rare diseases. Regulatory filings for denecimig (Mim8) in the United States and the EU are currently under review, potentially offering more convenient once-weekly, biweekly or monthly dosing options for hemophilia A. It has also secured U.S. and EU approvals for Alhemo to treat eligible patients with hemophilia A and B with or without inhibitors. Additionally, its once-daily oral candidate etavopivat met both co-primary endpoints in the phase III HIBISCUS study in sickle cell disease, with regulatory submissions planned in the United States and EU in fourth-quarter 2026.

Separately, Novo is expanding semaglutide's potential in liver disease. Wegovy injectable has received accelerated approval in the United States for noncirrhotic metabolic dysfunction-associated steatohepatitis (MASH) in adults with moderate-to-advanced liver fibrosis. The same active ingredient has also received conditional approval in the EU under the brand name Kayshild for MASH. Novo has also submitted MASH data for Wegovy pill to the FDA, with a regulatory decision expected in the first half of 2027.

NVO Focuses on Next-Generation Drugs

Novo is also advancing several next-generation obesity candidates. Apart from CagriSema, the company is evaluating once-weekly cagrilintide monotherapy in the ongoing phase III RENEW program for obesity, with and without T2D. Another promising candidate is zenagamtide (formerly amycretin), a dual GLP-1 and amylin receptor agonist in phase III development for obesity and T2D. Novo has also strengthened its pipeline through strategic collaborations, including a recent licensing deal with Hengrui Pharma for HRS-1596, a phase I-ready oral GLP-1/GIP dual receptor agonist with potential for once-weekly dosing.

Beyond its GLP-1 portfolio, Novo's once-weekly insulin Awiqli is approved in the EU and several other countries for adults with T1D and T2D. In the United States, Awiqli received FDA approval for adults with T2D in March 2026, followed by a label expansion in October to include patients aged 10 years and older with T2D.

NVO’s Stock Price, Valuation & Estimates

Year to date, Novo shares have lost 20.7% against the industry’s 22.6% 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 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 11.70 forward earnings, which is lower than 19.39 for the industry. The stock is trading much below its five-year mean of 28.74.

NVO Stock Valuation

Image Source: Zacks Investment Research

Earnings estimates for 2026 have decreased from $3.44 per share to $3.40 per share over the past 30 days. During the same time frame, Novo’s 2027 earnings estimates have increased from $3.43 to $3.45.

NVO Estimate Movement

Image Source: Zacks Investment Research

Here's How to Play NVO Stock

Novo, currently carrying a Zacks Rank #3 (Hold), has shown signs of improvement following its third-quarter earnings beat, raised outlook and strong uptake of Wegovy pill. However, its near-term growth prospects remain challenging amid persistent pricing pressures, weakness in the diabetes franchise and intensifying competition from Eli Lilly. Lilly's growing competitive presence in the obesity market, coupled with setbacks in Novo's pipeline, adds to the uncertainty. Despite the recent recovery in NVO shares, short-term investors may prefer to stay on the sidelines until there is greater visibility on sustainable growth and market-share stabilization. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

For long-term investors, holding existing positions remains reasonable. Novo's established obesity franchise, growing adoption of oral Wegovy and expanding global reach offer opportunities in the still underpenetrated GLP-1 market. Its next-generation obesity pipeline, broader semaglutide indications and diversification into rare diseases and liver care provide additional growth avenues. However, successful pipeline execution, sustained market-share gains and effective management of pricing pressures will be critical to restoring investor confidence and supporting long-term growth.