Novo Nordisk A/S (NVO): A Bull Case Theory

We came across a bullish thesis on Novo Nordisk A/S on Summit Stocks’s Substack by Summit Stocks. In this article, we will summarize the bulls’ thesis on NVO. Novo Nordisk A/S 's share was trading at $56.74 as of September 3^rd. NVO’s trailing and forward P/E were 14.49 and 13.48 respectively according to Yahoo Finance.

During a double press release, Novo Nordisk delivered a double shock with a sales warning and the appointment of a new CEO, sending shares down 20% on the day and another 6% the following session, erasing over $60 billion in market value. The reaction stands in stark contrast to the company’s track record: revenues have compounded at nearly 20% annually over the last five years, accelerating to 28% CAGR in the past two, reaching ~$44 billion in 2024. Despite reinvestment pulling return on invested capital lower from a peak above 60%, Novo still posts close to 40% ROIC, reflecting strong fundamentals.

Guidance, however, has been reset significantly, with revenue growth now pegged at 8–14% and operating profit growth at 10–16%, down from earlier expectations of 16–24% and 19–27% respectively. Much of the slowdown stems from weaker-than-expected growth in Wegovy and Ozempic, exacerbated by the compounded GLP-1 issue, where illegal compounded alternatives continue to circulate despite FDA crackdowns, impacting both Novo and Eli Lilly. Meanwhile, Novo named Maziar Mike Doustdar, EVP of International Operations since 2015, as its new CEO, signaling continuity given his role in doubling international sales.

Updated valuation work suggests limited downside: the mean Monte Carlo value sits at 399 DKK with a 10th percentile of ~362 DKK, versus a current price of 325 DKK at the low end of the range. While expectations have been reset, Novo remains a highly profitable growth business trading at just ~10x forward earnings, leaving the market reaction looking overly punitive.

Novo Nordisk A/S  is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 60 hedge fund portfolios held NVO at the end of the first quarter which was 64 in the previous quarter. While we acknowledge the potential of NVO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None.