Novo Nordisk A/S is a globally recognized pharmaceutical industry leader company specializing in diabetes care, obesity treatments, and other serious chronic conditions. The NVO stock has been on a long uptrend since 2017, rising from around $15 per share to its record high of $146 reached on June 25, 202544.
However, recent movements in its stock price have raised concerns about its short-term performance and long-term potential. Over the past few weeks, the stock has experienced a significant decline, raising concerns among investors about its current and future trajectory.
With these fluctuations, is Novo Nordisk stock a buy or sell right now?
Is Novo Nordisk (NVO) Stock a Buy or Sell?
Despite its reputation for innovation, Novo Nordisk’s recent performance has been lackluster. The stock is currently trading around $85 as of early January, 2025, marking a negative YTD of nearly 3% and a 1-year return of -22%. The company’s shares have also declined by 23.45% over the past month, significantly underperforming the Medical sector.
This decline can be attributed to several factors, including the recent underwhelming trial results for its obesity drug CagriSema, which caused a massive $125 billion wipeout of its market value.
Nonetheless, the primary trend is still bullish. When we look at the weekly or monthly chart, the recent price movement seems more like a price correction rather than the beginning of a downtrend.
From a valuation perspective, Novo Nordisk trades at a Forward P/E (price-to-earnings) ratio of 21.89, a premium compared to the industry average of 12.34. This reflects investors’ optimism about the company’s long-term growth, with most analysts suggesting that the stock is likely to rise in the upcoming year. According to TipRanks, NVO is at moderate buy; CNN analysts suggest the same, and on Yahoo Finance, the analysts price target stands at $115.
Moreover, the company’s fundamentals remain robust, with projected revenue and EPS(Earnings Per Share) growth of 19.23% and 19.72%, respectively, in the upcoming quarter. Investors who believe in Novo Nordisk’s long-term pipeline may view the current dip as a buying opportunity.
Add it all up: Depsite the recent negative sentiment, Novo Nordisk is a good long-tem investment. Being the manufuturer of two of the most widely used anti-diabetic medications in the market, Ozempic and Wegovy, it’s hard to see NVO continues to fall in the upcoming year.
Recent Developments Impacting Novo Nordisk Stock
Here are some of the recent developments regarding Novo Nordisk:
Clinical Trials Disappointment
Novo Nordisk’s recent clinical trial for its combination obesity drug fell short of investor expectations. The drug achieved an average weight loss of 22.7%, an impressive figure but below the target of 25%. Despite this, experts still view the drug as potentially one of the best in the market. However, the unmet expectations caused a sharp decline in Novo’s stock price.
Food and Drug Administration Updates and Supply Chain Expansion
The FDA’s recent decision to end compounding for Eli Lilly’s competing drug, Mounjaro, is favorable for Novo Nordisk as it strengthens market clarity. Also, Novo’s expanded manufacturing capabilities will significantly boost drug availability in the U.S., which is critical given the rising demand for its obesity treatments.
Competitive Landscape
Novo faces intense competition from Eli Lilly’s Mounjaro and upcoming oral weight-loss drugs. Pfizer and AstraZeneca are also entering the obesity treatment market, further intensifying the battle for market share. Novo’s ability to stay ahead will depend on maintaining its innovation edge and leveraging its robust manufacturing capabilities.
Is Novo Nordisk a Long-Term Investment?
For long-term investors, Novo Nordisk still holds considerable appeal due to its dominant position in the pharmaceutical market, particularly in diabetes and obesity treatment. The company’s flagship products, including Wegovy and Ozempic, have garnered global recognition and high demand, making them key drivers of revenue. Also, Novo Nordisk’s projected revenue growth of 19.23% for the upcoming quarter underscores its ability to expand its market presence even amidst setbacks.
Moreover, Novo’s strong commitment to research and development has historically paid off, positioning it as a leader in GLP-1(Glucagon-like peptide-1) receptor agonists. While the recent CagriSema trial results were disappointing, they do not overshadow the company’s broader pipeline, which includes innovative drugs for diabetes, hemophilia, and cardiovascular conditions. For patient investors who believe in the potential of groundbreaking medical advancements, Novo Nordisk remains a strong candidate for long-term investment.
NVO Market Analysis January 2025- Technical Analysis and Forecast
From a technical perspective, Novo Nordisk’s stock currently faces bearish signals for the near future. However, NVO’s primary trend remains bullish.
Looking at the monthly chart, we can see the recent pullback around the 50% line.
Based on the above chart, $82.77 remains a crucial level. A break below this level can push NVO to the next support level at $67.13.
On the daily chart, things look quite different. A triple top pattern was developing, and a reversal is a realistic scenario. At the same time, a break below $82.64, the recent day low, could confirm a continuation of the downward trend. If this would happen, the fan-theory model predicts a potential new bottom at $65.16 if bearish momentum persists, making this a crucial level to watch.
Addittionally, it’s worth keeping on eye on the gap that was formed on the Dec 19, 2024. Typically, gaps tend to get filled, so we suggest to closely watch these price levels.
Overall, technically, the future of NVO is unclear. On the long run, the prospects are still positive. Meanwhile, investors should be closely watching the next weeks to determine if the bearish sentiment continues.
How to Trade Novo Nordisk Shares
Trading Novo Nordisk shares can be done in two ways. The first method involves buying physical shares of Novo Nordisk stock via the exchange it is listed on. For that matter, you must find a brokerage firm that enables you to purchase shares via the exchange.
Alternatively, you can buy NVO shares through a Contract for Difference (CFDs). A CFD contract allows you to speculate on Novo Nordisk’s price without owning the underlying asset. Additionally, you can take advantage of a leverage ratio, which means you do not need a full amount of the position size to open a position.
Conclusion
In sum, Novo Nordisk’s stock certainly should be a stock to add to your watchlist. It is among the most interesting companies right now, with the growing buzz around weight loss medications.
The NVO currently in a challenging position, with short-term bearish indicators overshadowing its long-term potential. The recent trial setbacks, coupled with technical sell signals, suggest that caution is warranted for short-term investors.
Yet, the company’s strong fundamentals, innovative pipeline, and growth prospects make it a compelling option for long-term investors willing to weather short-term volatility.
Disclaimers:
This article is for educational purposes and should not be considered professional financial advice. Always perform your own research and consult a qualified advisor before making investment decisions, as all investments involve risks.
