The last almost five years have been a dizzying rollercoaster ride for shareholders of diabetes and obesity giant Novo Nordisk. With the beginning of the weight-loss wave in 2021, instigated by the approval of injection therapy Wegovy specifically for weight-loss, a ferocious three-year rally started. Novo shares quadrupled to above 1,000 DKK by summer 2024, making it even Europe’s most valuable company. The stock has lost 70% since then, with the cherry on top being the just released results and guidance for 2026 which sent Novo 17% lower yesterday. What now?
Summary and key takeaways from today’s Weekly
– The crowd is cheering and seeing buying opportunities with every dip Novo shares make.
– However, the initial thesis is entirely broken, with 2026 likely being the toughest year so far.
– I rate Novo Nordisk a strong sell, as the potential downside is still immense.
As is always the case, first something new arrives. An invention, a novelty that brings humanity forward in some shape and form. Measurable gains and flourishing businesses create certain beneficiaries.
Novo Nordisk (ISIN: DK0062498333, ticker: NOVOB) was such a beneficiary — until it collapsed under obese expectations.
The case of Novo is a prime example for how bubbles and retail euphoria result first in fat gains, but then pop with a huge bang, leading to big frustration. Important to understand, share prices do not have to implode materially in just a brief period.
It can happen via such a crash diet, but a multi-year torture is not necessarily better.
Novo shareholders have been fighting with lower and lower levels for more than one and a half years now. The share price was driven by enormous euphoria that led to a massive exaggeration. Ever since, the competitive landscape has only become bigger.
Add looming patent expirations, politically induced lower drug prices in the US, and disappointing news from clinical trials. All these have crashed Novo’s stock once again after the release of the 2025 results and the guidance for 2026.
The question is, have all the negatives been priced in now? Will 2026 be finally the long-awaited yo-yo?
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per 04 February 2026 market close – since August 2022
Short-lived hype or enduring growth story?
This is the question I want to try to answer today.
The stock of Novo Nordisk on twitter has been a “hot tip” and one of the “best picks” for quite some time now. Of course including the title of “best turnaround idea” for 2026, after the stock had dropped so much.
When tickers pop up in such annoying frequency, I’m almost certain it can’t work out.
There is the concept of what we call “Schwarmintelligenz” (group intelligence) in German — together we know more than on a single basis.
In stock investing, however, it is not seldom the opposite.
I was a bit early in June 2023 to call out ambitious valuations on twitter.
To be more precise, it was almost exactly one year too early, before Novo made its high — the stock rose more than 50% between my post and its peak which was the final stage of the exaggeration.
I can exactly remember many, many posts hyping up and pitching Novo based on its success, which admittedly was there.
But this was backwards-looking, a costly mistake when investing in stocks.
Respectively, when too much gets priced in, one should reconsider the investment case from a risk and reward perspective. Even if the business expands, this does not automatically lead to a higher share price. The market usually prices likely developments in advance into the stock — not when the last laggards of social-media investors decided to jump in.
Novo shares were priced at a PE ratio of more than 50x at some point, yet many voices saw a great opportunity to buy-and-tuck-away Novo shares “for the long-term”.
It might be they’ll never see the highs again.
A lot has happened since.
Before we look at the latest results and discuss the outlook (that in my view was the real reason for the latest sharp drop), a few basics.
Novo is a century-old company, specialized in diabetes care and certain rare diseases like hemophilia. But the core spins around diabetes and nowadays weight-loss. The rare-diseases segment generates < 10% of sales and it has only single-digit operating margins, so I am mentioning it just briefly.
Its older-generation diabetes GLP-1 drugs that are off-patent now were known to provide modest positive weight-loss effects of 5–10% in addition to the traditional diabetes care. But their effects were comparatively small, limiting uptake beyond the traditional diabetes treatment. Only with the next-gen semaglutide molecule a significantly higher, double as high weight reduction was achieved.
Maybe you have heard the terms semaglutide, Wegovy, and Ozempic.
I sometimes hear and read people mixing them up, as if they were all and the same. Here’s what you should know:
- semaglutide is the core molecule on which Novo’s current diabetes and obesity drugs are based
- Ozempic is the diabetes injection
- Wegovy is the weight-loss / obesity drug
After the discovery of profound weight-loss effects, Novo submitted an application to also being able to officially use the diabetes drug for weight-loss with its branded treatment. This is how the Wegovy injection was born.
In that sense, it is similar, but not the same. It is not exactly the same drug, as it has a higher semaglutide dosage.
But both have the same roots, so to speak, by using the same base molecule.
Ozempic (semaglutide for diabetes, approved 2017) already showed notable weight loss as a side effect, but Wegovy’s higher-dose approval and data made it a “game-changer” for obesity, far outperforming older drugs.
Earlier this year, Novo on the US market launched Wegovy in pill form (see here), and quite successfully even, as an extension and alternative drug administration option. And the pill has additional patents, potentially shielding it from immediate generics in some markets.
As injections are not for everyone, the pill is targeting a larger demographic, with the goal to extend the market meaningfully. It is not just a question of comfort, but also of insurance coverage vs. cash pay, dosages, tolerability, side effects, and costs. But for the sake of this weekly, I am leaving it with this.
All in all and until here, this sounds like a very profound story — likely what the majority forms their bullish thesis on. But that’s scratching only the surface, heavily relying on the past, and leaving out core elements that mostly invalidate the common view, injecting more money into a what it looks like sinking ship.
Turning now to the results, Novo reported total sales growth of 6% for 2025, exceeding analyst expectations. Its Obesity and Diabetes care portfolio expanded without bigger surprises. By treatment area, the company reported 31% growth in its booming Obesity care segment (currency neutral), while its GLP-1 diabetes sales grew only 6%, but this was okay, as it is not the major growth engine.
At least on a headline level.
From the annual report we can see that obesity / Wegovy has had dramatically higher growth rates than diabetes / Ozempic. The latter market is much more saturated, or the other way around, weight-loss is a much more underserved market, allowing for significantly higher expansion.
In both cases, the US market is by far the single biggest contributor (dark blue bar).
source: Novo Nordisk, annual report 2025, see here
Aggregating the top and bottom line together, and over the long-term, we can see from the following chart how sales exploded from 2021 onwards, more than doubling until today. As a reminder, not too long ago, Novo was a slow-growing heavy weight that suddenly turned into a major growth story.
The same for operating income — but you will notice a small dent in operating profits which did not grow anymore last year.
How come the stock cratered 17%, when the business is expanding?
And having a huge white space in obesity in front of them?
Among others, profit expectations were missed, but that is bean counting / peanuts compared to what’s coming next.
The first unpleasant development was that Ozempic, the diabetes treatment, for the first time EVER, experienced a sales drop on a quarterly basis. The full-year figure grew from 120 billion DKK to 127 billion DKK, but that is masking the latest sector dynamics.
I would even go so far that Ozempic has peaked in Q4 2024.
The real shock was Novo projecting 2026 sales to drop — yes, drop — by 5%–13% versus only a modest 1%—2% decline projected by analysts. This is not just a step on the brakes, but a full swing in the other direction.
Reasons for this sharp pullback are threefold.
During 2026, semaglutide faces patent expiration in certain markets like Brazil, Türkiye, China, and India, pressuring Novo’s international sales via price erosion and generic competition. Sounds like a nuance, however, these lost patents concern markets with an estimated third (!) of the world’s obese population.
And in addition, mostly growing populations (with the exception of China), unlike Europe and the US. which have patent protection until the early 2030s.
Second, upcoming pricing pressure in the US, stemming from the newly created “agreements” with the Trump administration’s “Most Favored Nations” pricing policy. Pharma companies are forced to lower prices, which is a hard punch in the gut for the growth story.
Third, despite a seemingly positive press release a day earlier, the presented update about a new drug missed expectations, despite showing some improvements to semaglutide. But observed weight loss was only 14.2% against hoped-for 20%.
All in all, Novo has turned from a market pioneer into a portfolio weight-loss story for shareholders.
The bad news is, the 70% share price drop is unlikely the end, but rather the confirmation of what has happened over the last years — to even intensify.
In plain, the trend is going into combo-therapies — which Novo so far has not been offering. By combining certain molecules, the effects can be improved. Not just for higher total weight-loss, but also regarding for example liver health recovery, cardiovascular benefits, etc.
This is what key competitor and American counterpart (in the diabetes and weight-loss story) Eli Lilly (ISIN: US5324571083, ticker: LLY) has been banking on.
Lilly’s stock continues to gain pounds, as it has the better treatments and on top the better perspectives. Its so called dual antagonists offer significantly higher weight-loss benefits above 20%.
The following charts shows on a quarterly basis the unstoppable growth of Eli’s diabetes (Mounjaro) and obesity (Zepbound) drugs.
In its just-released results, Eli Lilly said on the conference call that Zepbound held nearly 70% share of new prescriptions in the international branded obesity market.
But that’s not everything. Lilly has a triple-agonist in the clinics with ~24–28% weight loss, or 50–100% higher than Novo’s drugs. If successful in the ongoing phase III trial, it could launch in 2027. Lilly’s current drugs, but also its pipeline, position them for dominance.
So you know where Novo is heading.
Don’t get me wrong, Novo still leads the GLP-1 market with a ~50% global share, with the current oral edge. But that is melting like belly fat.
Overall, the obesity market in 2026 clearly favors Lilly over Novo due to stronger growth, as a result of superior efficacy, and a robust pipeline including the launch of an oral version either. Pills will likely democratize access, while multi-agonists (what Lilly banked on) push weight loss boundaries enabling better results, while pricing “deals” broaden U.S. coverage amid competition.
This pricing war together with market share losses will in my view likely results not only in lower sales, but also in hefty margin erosion for Novo.
In that sense, the really interesting profit growth might turn deeply negative, putting a question mark behind the current share price.
Novo expects a free cash flow of 35–45 billion DKK for 2026. In 2025, they reported 28.3 billion DKK, which was, however, including an acquisition. My calculation came out at around 60 billion DKK.
This would be a sharp drop, resulting from on one side sales pressure…
… But Novo is also heavily investing in the US to circumvent tariffs and to increase capacities, mainly for the pill rollout.
So, they are investing heavily into a pricing war while having inferior drugs.
To put this into perspective, Novo has a market cap of ~1.3 trillion DKK (170 billion EUR). Adding its net debt it is an EV of 1.4 trillion DKK. Accordingly, the multiple is a hefty around 40x on expected free cash flow.
Versus last year’s earnings, it is a factor of 14x.
Sounds cheap, but with declining sales and margin pressure, this seems still way too much. The underlying bull thesis is that they will turn the corner, benefitting from much higher volumes, led by strong pill adoption.
Even if they succeed on expanding volumes significantly, the lower-margin profile together with pricing pressure from the US government will limit the upside. The US market peak was revised down to ~100 billion USD by 2030 from 150 billion USD.
A turnaround could be possible if pills volumes surge dramatically. But pricing wars and Lilly’s dominance loom large, while Novo stock is still pricey.
Novo is a strong sell — the former thesis is broken.
I would not be surprised, if Novo stock falls another 50% from here.
And this is why I did not buy into the Novo hype and then turnaround hopes.
My Premium PLUS members got this stock idea from me instead.
We are currently down, but in my view this could be a huge beneficiary in the weight-loss market. The company is very tiny compared to its heydays and ready to gain massively.
It benefits from the pill rollout, unlike drug makers from lower drug prices (!), while offering a holistic service for weight-loss management.
There has barley been a better time to have a look into my report —>
Conclusion
The crowd is cheering and seeing buying opportunities with every dip Novo shares make.
However, the initial thesis is entirely broken, with 2026 likely being the toughest year so far.
I rate Novo Nordisk a strong sell, as the potential downside is still immense.
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