One of the most talked-about stocks among value investors is Novo Nordisk. That’s why I asked my favourite Danish professional investor, Ole Soeberg, to do a podcast with me tomorrow. So look out for the episode in the next few days.
In preparation for the episode, I decided to take a historical look at the revenues generated by the various drugs.
But first, as with all my Substack posts, here are the stock basics:
Market Info
Ticker: CPSE:NOVO B
Ticker (ADR): NVO
Stock Price (Local): DKK 361.05
52-W High (September-03-2024): DKK 942.40
52-W Low (August-07-2025): DKK 287.60
5 Year Beta: 0.27
Avg Volume (3-month, millions): 7.0
Avg Volume (USD, millions): 394.2
Shares outstanding (basic, millions): 4,443m
Country of Incorporation: Denmark
Trading Currency: DKK
Filing Currency: DKK
Enterprise Value
(Figures on the left are in USD, and on the right are in DKK)
Market Cap (millions): $246,452 | DKK 1,584,971
Plus: Total Debt $15,628 | DKK 99,268 of which Leases $939 | DKK 6,766
Less: Cash and ST Investments: -$2,981 | DKK -18,934
EV (millions): $259,099 | DKK 1,665,305
Key Valuation Metrics
P/E forward 14x
EV/EBITDA forward 10.7x
Dividend Yield 3.2%
Key Persons
Novo Nordisk announced on May 16, 2025, that its CEO, Lars Fruergaard Jørgensen, would step down. Investors certainly didn’t like that, and the stock dropped -7% the next day! This decision was described as a "mutual agreement" between Jørgensen and the company's board of directors. Lars Fruergaard Jørgensen had been the CEO since January 1, 2017
Under his leadership, Novo became a global powerhouse with blockbuster medications Ozempic and Wegovy. The company’s stock tripled, and it became Europe’s most valuable company. But growing competition from Eli Lilly and compounded products in the U.S. market led to a decline in the stock price.
He was replaced by 33-year insider Maziar Mike Doustdar on August 7.
Marcus Schindler retired after 7.5 years at Novo and 4 years in his role as Chief Science Officer. He was replaced by Martin Lange. Emil Larsen took over Maziar Mike Doustdar’s position as EVP of International Operations.
President, CEO & Member of Mgmt Board: Doustdar, Maziar
Executive VP, CFO & Member of the Mgmt Board: Knudsen, Karsten
EVP of Product Supply, Quality & IT and Member of Mgmt Board: Wulff, Henrik Board of Directors, Chairman: Lund, Helge
Top 5 Institutional holders:
Novo Holdings A/S 28% (holds voting control via dual-class shares)
BlackRock 5%
Vanguard 3%
Norges Bank Inv Mgmt 2%
GQG Partners LLC 1%
Performance
The pullback has affected the long-term performance. The 5-year and 10-year performance CAGR is below its earnings growth.
5-year chart shows the stock revisiting 2022 levels, but is still above 2021 (the year Wegovy got FDA approval). In FY2022 Novo’s obesity drugs recorded a 101% growth in revenues.
Revenue Segments
The company provides good data to work with, and I always consider that as a piece of evidence of a potentially high-quality company. They publish a financial workbook that contains the quarterly sales of the drugs, and I was able to go as far back as 2019. There were some changes over the years, so I shifted some things around, but I’m pretty happy with the result below:
At point A (see left column in table), Total Diabetes care, generates 71% of revenues from 80% in 2019 and is the most important segment. There are 3 further subsegments: A1) Total GLP-1, A2) Total insulin, and A3) Other Diabetes care (which we will ignore here).
Total Insulin used to make up c.50% of group revenues (FY19), while in FY24 it only made up 27% of Total Diabetes! Only 3% reported growth for Insulin in 1H25, it has been pushed aside by GLP-1 drugs, lower margins, commoditization, and competition. Still, it is used for type 1 diabetes and so will remain an important part of Novo going forward.
The star sub-segment is the GLP-1 drugs, which consist of Ozempic, Victoza, and Rybelsus. Ozempic and Victoza are injectables, while Rybelsus is oral. GLP-1 revenues are 51% of the total while Ozempic alone is 41% of total company revenues (up from 9% in FY19). Victoza requires daily injections and is naturally in decline as the other drugs are preferred.
Both Ozempic and Rybelsus have had strong growth (see below), but this dropped to 14% and 4% respectively, in the 1H25. Rybelsus, though, is still expanding its markets.
At point B, Obesity care, generates 22% of revenues from 5% in 2019. Wegovy and Saxenda make up this category. Saxenda is in decline, dropping -50% yoy in 1H25. It’s about convenience with Saxenda requiring daily doses while Wegovy only once a week. Wegovy is up 75% in reported figures for 1H25.
Below, we can see Wegovy's growth at constant exchange rates (CER) over the last 6 quarters.
What happens with Wegovy will be a point of discussion on the podcast, so make sure you sign up below for free.
At point C, Rare diseases, generates 6% of revenues and has been flat for some years. This category made up to 16% of revenues in 2019. There could still be hope here as the category is up 14% in reported numbers in 1H25! Rare endocrine disorders were up 49% in 1H25 as Norditropin manufacturing issues have been fixed, and Sogroya is gaining traction post-launch.
Peers / Comparables
In its annual report, Novo states that its peer group consists of AstraZeneca, Bristol-Myers, Eli Lilly, GlaxoSmithKline, Lundbeck, Merck, Novartis, Pfizer, Roche, and Sanofi.
Novo and Eli Lilly have by far the highest ROE and operating margins from the group.
Forward two-year growth in revenues is expected to be highest for Eli Lilly, with Novo coming in second.
Hence, we see Eli Lilly trading at a premium to the group in both P/E and in EV/EBIT. Novo, however, trades at the average multiple of the group.
DCF Valuation
Ozempic and Wegovy made up 65% of revenues in 1H25, and how those sales hold up versus Mounjaro and Zepbound (Eli Lilly’s drugs), as well as the upcoming pipeline of oral drugs, will determine the firm’s growth and valuation. But I don’t believe in winner takes all. And Eli Lilly’s 30+ P/E ratio is pricing in a lot more than Novo!
Guidance for top-line growth is 8-14% and for operating profit 10-16% at constant exchange rates (3-5% lower in DKK). If we use mid-numbers and apply on Novo’s financials, we get DKK 311b sales and DKK 140b operating profit. That compares to DKK 320b consensus sales and DKK 139b consensus EBIT. Close enough.
After 2025, I’m going to assume 4% top-line growth, as well as a small decline in EBIT margin to 42%. I’m also going to unjustifiably keep CAPEX higher than what is probably should be considering the 4% growth. Management has spoken about a maintenance level of 5% of sales. I got it in the teens.
My forward FCF forecast 2026-28 comes in at DKK 74b, DKK 86b, and DKK 89b compared to consensus forecasts of 85b, 106b, 129b
That still gets me to a stock price that is just above current levels! To me, this smells like an opportunity. I’m looking forward to chatting with Ole tomorrow! Stay tuned!
An unrelated to Novo announcement: I am organising my 2nd Asia event in March 2026. See below if interested. Accepting applications. Half the seats are already gone.
📢 2nd FatAlpha Value (Asia) Conference
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🎥 1st Asia Event highlights:
Expectations are very low at the moment...