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Novo Nordisk Earnings: Strong Outlook Supported by Expanding Pipeline

We still view Novo’s stock as overvalued.

The logo of the Danish pharmaceutical company Novo Nordisk on the facade of the new German headquarters.

Key Morningstar Metrics for Novo Nordisk

What We Thought of Novo Nordisk’s Earnings

Novo Nordisk NVO reported 36% full-year constant currency sales growth for the full year, ahead of both our and consensus expectations. Meanwhile, operating income growth of 44% was in line with our estimates. We’re maintaining our fair value estimate of $80 per share.

Sales outperformance was driven by 52% growth in the firm’s GLP-1 diabetes sales (largely Ozempic), despite GLP-1 obesity sales growth of 154% (largely Wegovy), which was slightly below investors’ already sky-high expectations. Novo’s expectations for 2024 (18%-26% constant currency sales growth) are slightly ahead of our prior forecast, and although we have now raised our near-term estimates, another significant jump in capital expenditures expected this year countered any potential valuation impact. We now assume that Novo will be able to grow the top line by more than 20% in each of the next three years (2024-26) as it fights to meet high demand with expanded supply and contends with new competition from Eli Lilly LLY.

We still forecast a $170 billion global GLP-1 market by 2031, with $120 billion of this from obesity/overweight and most of the market relatively evenly split between Novo and Lilly. We expect to see key data on next-generation obesity drug candidates this year that could help diversify away from the semaglutide molecule and support Novo’s wide economic moat.

In 2024, we anticipate prescribing labels for semaglutide to extend beyond basic indications in diabetes (where it is approved as Ozempic and Rybelsus) and obesity (as Wegovy), with cardiovascular benefits poised to be added after the clear benefit in the Select trial. Recent positive data in heart failure, kidney disease, and knee osteoarthritis is also encouraging, and we expect additional data in liver disease (end of 2024) and Alzheimer’s (2025) could further boost the drug’s midterm potential.

Novo Nordisk Stock Price

Data as of Source: Morningstar Direct.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Karen Andersen

Strategist
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Karen Andersen, CFA, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She is responsible for biotechnology research.

Before joining Morningstar in 2005, Andersen received a master’s degree in business administration from Rice University, where she served as senior healthcare analyst for the M.A. Wright Fund and earned the distinction of Jones Scholar. She has scientific research experience in both academia (at Rice University and the University of Queensland in Australia) and industry (at Lexicon Genetics and a subsidiary of Genzyme).

Andersen also holds a bachelor’s degree in biochemistry from Rice University, where she graduated magna cum laude. She is a member of Phi Beta Kappa and holds the Chartered Financial Analyst® designation. She ranked first in the biotechnology industry, and had the highest score overall, in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

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