Investment Advisory: Purchase shares of Novo Nordisk, dispose of shares in Bristol Myers Squibb
Novo Nordisk, a leading name in global healthcare, is currently experiencing a dip in its share price, down around 22% year-to-date. However, analysts remain optimistic about the company's future growth in revenues and earnings.
The Danish pharmaceutical giant reported strong revenue growth of about 24% year-over-year, with quarterly revenue reaching 78.09 billion DKK and a trailing twelve-month total of approximately 303.14 billion DKK. This growth is driven largely by new and existing therapies, particularly in obesity and diabetes treatments, with Wegovy gaining acceptance in markets such as China, opening vast new opportunities.
The earnings outlook also appears robust. Zacks Consensus estimates forecast around a 20% increase in sales and 21% growth in EPS for 2025, although EPS projections for 2026 have softened somewhat. Novo Nordisk trades at a forward P/E of about 15.5, slightly higher than some peers like Amgen, reflecting growth expectations but also some premium valuation. Dividend yield is moderate at around 2.5%.
Looking towards 2030, Novo Nordisk's future outlook hinges on its ability to capitalise on the expanding obesity drug market, expected to approach $100 billion globally. Key factors influencing success include therapeutic efficacy, safety, ease of use, and manufacturing scalability. With regulatory advancements and growing markets (notably China), analysts expect continuing revenue growth, potentially pushing the stock price towards $85 in 2026 and higher longer term based on sustained innovation and market capture.
Novo Nordisk operates through two business segments: diabetes and obesity care, and biopharmaceuticals. The company is known for its celebrity-favourite drug Ozempic. Despite the recent price dip, Novo Nordisk's fundamentals remain strong, offering resilience and upside for investors seeking quality growth and a defensive stance in a volatile environment.
It's worth noting that the forward earnings multiple is forecast to decline from 17 in 2025 to under 10 by 2029. Revenues are expected to grow from 330-billion Danish kroner in 2025 to 520-billion kroner by 2029. Free cash flow is projected to reach 174-billion kroner by 2029.
Nick Kunze, a senior portfolio manager at Sanlam Private Wealth, has recommended buying Novo Nordisk, citing the company's growth potential despite the recent price drop. Novo Nordisk's earnings before interest and tax margins are projected at about 50%. Dividend yields are set to increase steadily.
In conclusion, despite the recent price dip, Novo Nordisk's strong revenue and earnings growth, promising products, and expanding markets make it a solid choice for investors seeking growth opportunities in the healthcare sector.
- Investors seeking growth in the healthcare sector might find interest in Novo Nordisk, a company known for its resilience and upside, as recommended by senior portfolio manager Nick Kunze.
- With growing markets, particularly China, and continued revenue growth due to its expanding obesity drug market, analysts foresee the potential of Novo Nordisk's stock price reaching $85 in 2026 and higher long-term based on sustained innovation and market capture.
- In science, finance, and business, Novo Nordisk's strong revenue growth, robust earnings outlook, and favourable future outlook make it an attractive investment opportunity in the health-and-wellness sector, offering defensive stability in a volatile environment.
