Novo Nordisk: Lower 2025 Guidance Reflects Persistent Competition from Compounded Semaglutide

Key Morningstar Metrics for Novo Nordisk

• Fair Value Estimate: $71.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

Novo Nordisk NVO saw 18% sales growth and 40% operating profit growth at constant currencies in the second quarter, but management reduced 2025 guidance to 8%-14% sales growth and 10%-16% operating profit growth at constant currencies. Maziar Mike Doustdar will become president and CEO on Aug. 7.

Why it matters: Novo investors have been concerned about the growth prospects for GLP-1 drug semaglutide due to branded competition (Eli Lilly’s Mounjaro/Zepbound), as well as cheaper and unauthorized compounded versions of semaglutide.

• Novo appears to be losing GLP-1 volume share to Lilly in the branded market slightly faster than we expected, although price erosion seems more in line as Novo fights for access in both the insured market (including the exclusive CVS deal) and the newer cash channel (the NovoCare website).
• Unexpectedly, compounded semaglutide has persisted as a strong part of the GLP-1 obesity market, with at least 1 million patients (about 30% of the US market) still taking personalized versions of semaglutide despite the end of the semaglutide compounding grace period on May 22.

The bottom line: We’re lowering our fair value estimate for wide-moat Novo to $71 per share from $86 after incorporating lower 2025 guidance and weaker prospects for US growth over the next few years. Despite the weak near-term outlook, we think the shares appear attractive for long-term investors.

• While second-quarter results look in line, the new full-year guidance implies much weaker single-digit constant currency growth in the second half. Building in currency headwinds, we now assume 8% sales and 6% operating profit growth, as reported, for 2025.
• Doustdar’s 10-year record as head of Novo’s international operations should give him the experience needed in commercial execution to slow the company’s share loss to Lilly and help support a strong pipeline, but we think near-term pressure will be difficult to counter.