Why Novo Nordisk Stock Popped Today

Key Points

• London's Financial Times highlights improved weight loss from taking more Ozempic.

• Eli Lilly's Mounjaro still seems more effective.

• 10 stocks we like better than Novo Nordisk ›

Novo Nordisk (NYSE: NVO) -- the original Ozempic stock -- is getting a boost from a Financial Times report this morning highlighting positive results from two weight loss trials using increased dosages of semaglutide (the active ingredient in Ozempic).

Novo Nordisk stock is responding positively to the news, up 2.1% through 10:55 a.m. ET.

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A rising tide could lift Novo's boat

As FT reports, Novo Nordisk recently performed clinical trials in which patients took 7.2 mg doses of Ozempic instead of the more common 2.4 mg dose. Patients in the trials lost an average of 19% of their body weight over the course of 72 weeks. That's as compared to a 16% average on the 2.4 mg dose.

FT observes that tirzepatide, the active ingredient in Eli Lilly's (NYSE: LLY) Mounjaro GLP-1 weight loss drug, has proven even more effective at high doses, with weight loss of 19.5% at 10 mg, for example, and 20.9% at 15 mg. Nevertheless, the paper observes, Novo's Ozempic is at least competitive with Lilly's results, and if priced as an "affordable" alternative to Mounjaro, it could maintain or even grow market share.

Is Novo Nordisk stock a buy?

And do you know what's even more affordable? Novo Nordisk stock.

Priced at just 14 times earnings, Novo shares cost a mere fraction of the 49 P/E ratio of Eli Lilly stock. And Novo shares pay a generous 3.1% dividend yield, versus only 0.8% at Eli Lilly. That makes Novo Nordisk the obvious value candidate -- with a caveat.

If Novo follows FT's advice and cuts prices on Ozempic and Wegovy to win market share, its profits may also take a hit, raising the stock's P/E and making it a bit more expensive. So be careful what you wish for, investor.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.