Novo Nordisk Earnings: CVS Deal, Oral Semaglutide Support Growth Despite Compounding Uncertainty

Key Morningstar Metrics for Novo Nordisk

• Fair Value Estimate: $71
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

What We Thought of Novo Nordisk’s Earnings

As announced July 29, Novo Nordisk NVO saw 18% sales growth and 40% operating profit growth at constant currencies in the second quarter. However, management reduced 2025 growth guidance for sales (8%-14%) and operating profit (10%-16%). Maziar Mike Doustdar will become president/CEO on Aug. 7.

Why it matters: Novo’s GLP-1 business (three quarters of total sales) has been squeezed by illegal compounded versions of semaglutide (the active ingredient in diabetes drug Ozempic and obesity drug Wegovy) and branded competition from Eli Lilly’s Mounjaro (diabetes)/Zepbound (obesity).

• We estimate that the global market for GLP-1 therapies across indications will reach $200 billion by 2031, but Novo’s share of this market is currently declining due to pressure from compounders and Lilly.
• Incoming CEO Doustdar will need to focus on accelerating pipeline progress and plans to double down on the firm’s focus on diabetes and obesity.

The bottom line: We’re maintaining our $71 fair value estimate for wide-moat Novo Nordisk, as we think its undervalued shares are incorporating continued headwinds from Lilly and compounders without fully accounting for near-term tailwinds from semaglutide or long-term pipeline potential.

• Wegovy’s exclusive position on the CVS national formulary as of July 1 is boosting Wegovy prescriptions in the 90% of Novo’s business coming from insured sales. However, the persistence of the drag from compounded semaglutide (via a personalization loophole in guidelines) remains uncertain.
• The launch of oral semaglutide in obesity in 2026 in the US could help on several fronts, as management noted that this will not be a supply-constrained launch, and we think the drug’s complexity (SNAC technology) could prevent compounders from offering an effective oral.

Coming up: Potential approval of semaglutide for liver disease in the third quarter, as well as Alzheimer’s data in the fourth quarter, could provide a boost to semaglutide’s sales potential.