Novo Nordisk S/A (NYSE:NVO)’s investment story has changed dramatically. The stock has declined by over 25% since the start of 2026. The selloff has changed the stock’s valuation. Yahoo Finance’s latest data puts Novo Nordisk at 11.83 times forward earnings, compared with 13.33 in September 2025. That makes Novo look considerably less demanding than it did when investors were pricing in years of uninterrupted obesity-drug growth.
But the lower valuation is not happening without reason. Novo Nordisk S/A (NYSE:NVO) is facing stronger competition from Eli Lilly, pricing pressure in the U.S., slower-than-expected momentum from its new Wegovy pill, and questions about whether its next generation of obesity medicines can close the efficacy gap. The investment case now depends on whether those problems represent a temporary reset or a fundamental change in Novo’s growth trajectory. We recently compiled a list of the best healthcare stocks to buy according to hedge funds, and NVO does not rank on it. Check out the complete list here.
The Obesity Franchise Is Still Enormous
Before we dive into the investment story, take a look at our recently published article on Novo Nordisk Just Beat Lilly in a Trial. Is the Comeback Finally Taking Shape? for better comparative insight on how the two companies compare in the current market context.
The market’s disappointment should not obscure the scale of Novo’s underlying franchise. Its Annual Report 2025 showed that sales reached DKK 309 billion with a compound annual growth rate of 17%, while obesity-care sales climbed to DKK 82 billion. The company has built one of the world’s largest positions in obesity and diabetes, and GLP-1 volume growth continued in 2026.
There are also signs that Novo’s newer products can expand the market rather than simply defend existing patients. The Wegovy pill launched in the U.S. in January 2026, and Novo said total prescriptions had surpassed three million by June. The company has also launched higher-dose Wegovy 7.2 mg.
That gives investors a potentially important second act, which shows that Novo does not have to rely solely on the original injectable Wegovy and Ozempic franchises. Oral semaglutide, higher-dose Wegovy and next-generation medicines could broaden the company’s addressable market. We meticulously crafted a list of the 7 Best Pharma Stocks to Invest In Now. Access the complete list here.
But the Growth Problem Is Real
The difficulty is that Novo Nordisk S/A (NYSE:NVO) is no longer operating in a market where being first with an effective GLP-1 is enough. Eli Lilly’s Mounjaro and Zepbound have been gaining ground, with Lilly reporting that Mounjaro sales jumped 91% to $9.94 billion in the second quarter of 2026 and Zepbound sales reached $4.93 billion. Reuters reported that Novo’s Wegovy pill generated $497 million in the quarter, slightly below expectations, while Lilly continued to widen its lead in the injectable GLP-1 market.
DON’T MISS: Can Oral Wegovy Help Novo Nordisk Capture China’s $4.46 Billion GLP-1 Opportunity?
Novo’s own numbers reflect the more difficult environment. In August, the company raised its 2026 adjusted sales and operating-profit outlook, but the new ranges still called for 0% to -6% growth at constant exchange rates. The improvement from its previous outlook was driven by higher expectations for GLP-1 sales rather than a return to the growth rates investors once expected.
Can the Pipeline Change the Equation?
This is where the valuation becomes interesting rather than simply cheap. CagriSema remains the most important near-term pipeline opportunity for the company. Novo reported in September that CagriSema produced superior weight loss to tirzepatide in the REIMAGINE 5 trial in adults with type 2 diabetes, while another Phase 3 trial showed 21% weight loss versus placebo in adults with overweight or obesity.
Novo is also targeting a broader pipeline beyond semaglutide. At its September Capital Markets Day, management said it aims to launch more than five multi-blockbuster medicines by 2030 and generate more than DKK 150 billion in risk-adjusted pipeline sales by 2035. Those are company ambitions rather than financial guidance, so they should not be treated as guaranteed outcomes.
The pipeline gives Novo a credible route back to growth, but investors are being asked to wait for products that have not yet become commercial franchises.
Is the 12x Valuation Enough?
At roughly 11.8 times forward earnings, Novo Nordisk S/A (NYSE:NVO) is no longer priced as though obesity growth will remain flawless.
That makes the risk-reward considerably more interesting after a 37% decline. The stock does not need to regain its previous growth trajectory immediately for the valuation to work. It needs the obesity franchise to remain structurally strong, the Wegovy pill and higher-dose products to broaden demand, and CagriSema and the next generation of medicines to restore growth.
The problem is that competition has become more credible, pricing pressure is increasing, and Novo’s 2026 outlook is still for declining adjusted sales and operating profit. The stock therefore should not be treated as an obvious bargain simply because it has fallen.
For investors, the real opportunity is that Novo is no longer priced for obesity-market dominance. The question is whether it has fallen far enough to make a merely strong, rather than dominant, future valuable again.
READ NEXT: Can Eli Lilly Catch Novo Nordisk in the Oral GLP-1 Race? AND Abbott vs. Intuitive Surgical: Is Consistent Growth Better Than Premium Growth?
This article is originally published at Insider Monkey.
