Is There More Upside For NVO Stock?
Novo Nordisk (NYSE: NVO) recently released its Q4 results, with revenues and earnings exceeding the street estimates. It reported sales of 85.7 billion Danish kroner (DKK) and profit of 28.2 billion DKK, compared to the consensus estimates of 80.6 billion DKK and 26.4 billion DKK, respectively. The company continued to benefit from strong growth for its obesity drugs. The company’s outlook aligned with the analysts’ estimate, and this should bode well for its stock.
Novo Nordisk’s revenue of 85.7 billion DKK reflected a 30% y-o-y growth, led by its diabetes and obesity drugs. Ozempic sales rose 12% y-o-y to 33.9 billion DKK, while its popular obesity treatment – Wegovy – saw a solid 107% y-o-y jump to 19.9 billion DKK. The company’s rare disease drugs portfolio also saw a solid 25% y-o-y growth.
The company also saw its operating margin expand by 230 bps to 42.9% in Q4’24. Higher revenues and margin expansion resulted in profit of 28.2 billion DKK, up 29% y-o-y. Looking forward, Novo Nordisk expects 2025 sales to grow by 16-24% and operating profit to increase by 19-27% in constant currency. This compares with 20% top-line growth per the street estimates.
The upbeat results and an in-line guidance cheered investors. Furthermore, the company’s most significant upcoming milestone is the anticipated regulatory submission for Cagrisema, its advanced obesity treatment, which could come as soon as Q1 2026. The drug carries substantial commercial potential, with analysts projecting peak annual sales to exceed $20 billion. At its current levels of $86, NVO stock is trading at around 9x trailing revenues, versus the stock’s average P/S ratio of more than 11x over the last five years. Despite growing competition in the obesity treatment landscape, the decrease in NVO’s valuation multiple appears unwarranted given Wegovy’s strong sales momentum and the promising potential of Cagrisema in development.
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