Few companies attract as much reliable attention as Novo Nordisk (NYSE: NVO) does these days. With a bull market coinciding with historic growth for the Danish pharmaceutical giant in its GLP-1 drugs, it’s no surprise that share prices have almost doubled in the past three years.
But given its strong performance lately, could the stock be an equally good buy for investors in the future? To find out, let’s take a look at what it’s up to.
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Novo Nordisk is among the fastest-growing major pharmaceutical competitors, making it easy to formulate a long list of reasons to buy shares. In the third quarter, normalized diluted earnings per share (EPS) increased 27.2% compared to the same quarter a year earlier, to $0.90; Trailing twelve month (TTM) revenue of $39.3 billion also rose 16.7% year on year.
The driving force behind Novo Nordisk’s growth is its control of 65% of the global market for GLP-1 drugs, which treat conditions such as type 2 diabetes and obesity. The successful GLP-1 drugs, Ozempic and Wegovy, are household names and in such high demand that shortages have been common for some time. Even the presence of powerful direct competitors such as Zepbound Eli Lilly has not yet caused the segment’s growth to slow down.
In addition, the company is conducting research and development (R&D) work on the active ingredient in these two drugs, a molecule called semaglutide: it may also be useful to treat a wide range of conditions with large treatment markets, including Alzheimer’s disease and metabolic dysfunction. -associated steatohepatitis (MASH), along with others such as heart risks in people with obesity or diabetes.
Some of these efforts already appear to be largely on the path to success. According to an update from a Phase 3 clinical trial in the MASH program, published on November 1, semaglutide is quite effective at controlling and reversing some of the most dangerous effects of that disease. It will take some time before the company completes trials and applies for regulatory approval. But if it does, there is a good chance that the addressable market for the drug will increase substantially, allowing the country to generate even more revenue from its significant investments in manufacturing capacity.
As if that weren’t enough, the pipeline includes a mix of early-, mid- and late-stage programs that attempt to treat obesity using approaches other than semaglutide alone. That means it will most likely maintain its large share of the obesity drug market for many years to come. And given that obesity care could be the largest pharmaceutical drug market ever — some estimates say it will reach about $100 billion by 2030 — because it’s well-positioned, there’s a big part of the story as to why Novo stock Nordisk worth buying.
