Novo Nordisk NVO is scheduled to report fourth-quarter 2024 results on Feb. 5, 2025, before the opening bell. The Zacks Consensus Estimate for quarterly revenues in the to-be-reported quarter is pegged at $11.34 billion, while the same for earnings is pinned at 83 cents per share.

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In the past 60 days, the Zacks Consensus Estimate for Novo Nordisk’s 2024 earnings per share (EPS) declined from $3.28 to $3.16. During the same time frame, the company’s 2025 EPS forecast has declined from $4.08 to $3.88.  

NVO Estimate Movement

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NVO’s Earnings Surprise History

NVO’s performance has been mixed over the trailing four quarters, with earnings beating estimates in two quarters and missing the mark on the other two occasions. On average, Novo Nordisk registered an earnings surprise of 1.46% in the last four quarters. In the last reported quarter, the company reported a negative surprise of 1.10%.

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Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Novo Nordisk this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Novo Nordisk has an Earnings ESP of -1.42% and a Zacks Rank #4 (Sell) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Shaping NVO’s Upcoming Results

NVO operates under two segments — Diabetes and Obesity Care and Rare disease. Revenue growth in the fourth quarter of 2024 is expected to have been driven primarily by the strong demand for NVO’s diabetes and obesity care medicines, especially semaglutide. Notably, semaglutide, a GLP-1 agonist, is approved as an Ozempic pre-filled pen and Rybelsus oral tablet for type II diabetes (T2D) and as a Wegovy injection for weight management.

Wegovy is likely to have been the key top-line contributor for Novo Nordisk in the to-be-reported quarter on the back of strong prescription trends. Wegovy’s label has been expanded in the United States and the EU to reduce the risk of serious heart problems in obese/overweight adults, which has been boosting its sales. The company is looking to further expand Wegovy’s label to treat patients with obesity-related heart failure with preserved ejection fraction in the EU and U.S. markets.

Ozempic sales are likely to have increased in the to-be-reported quarter based on the trend witnessed in the past few quarters, fueled by rising demand. Quarterly revenues from sales of Rybelsus and certain insulin products are likely to have put up a strong performance in fourth-quarter 2024, contributing to the top-line growth. Label expansion efforts for Ozempic and Rybelsus are also ongoing. NVO has been investing heavily to ramp up production of its GLP-1 drugs.

Novo Nordisk’s revenues under the Rare Disease segment are likely to have increased in the to-be-reported quarter, mainly due to higher sales of its hemophilia A and B products.

NVO faces serious competition from Eli Lilly LLY in the diabetes and obesity care market space. Lilly has seen unparalleled success with tirzepatide, a dual GIP and GLP-1 receptor agonist, which is marketed as Mounjaro for T2D and Zepbound for obesity. Several other companies like Amgen AMGN and Viking Therapeutics VKTX are making rapid progress in the development of GLP-1-based candidates in their clinical pipeline. These can pose strong competition to NVO in the future.

NVO’s Price Performance & Premium Valuation

The stock has plunged 23% in the past three months compared with the industry’s 5.9% decline. NVO has also underperformed the S&P 500 and the sector in the same period, as seen in the chart below. NVO is currently trading below both its 50 and 200-day moving averages.

NVO Stock Underperforms the Industry, Sector & the S&P 500

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Novo Nordisk is trading at a premium to the industry, as seen in the chart below. Going by the price/earnings ratio, the company’s shares currently trade at 21.42 forward earnings, which is more than 16.42 for the industry.

NVO Stock Valuation

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Investment Thesis

Novo Nordisk’s growth prospects for its semaglutide medicines presently appear to be at risk. Medicare has selected NVO’s semaglutide medicines for the second round of price negotiations in 2025. For continued coverage of its semaglutide medicines under Medicare, Novo Nordisk has until Feb. 28, 2025, to decide if it will participate in negotiations or pay a large tax on U.S. sales of the drugs. Either way, a decline in the company's profit margins is anticipated in the future. This is a huge blow for the company.

Moreover, Lilly’s tirzepatide injection products have been removed from the FDA’s drug shortage list. This shift suggests LLY can now meet the demand for obesity medications, potentially capturing a larger U.S. market share and boosting its revenues, while Novo Nordisk’s Ozempic and Wegovy remain on the list, limiting its sales opportunities.

Last year, Novo Nordisk shares plunged after it failed to meet the efficacy guidance for another investigational obesity candidate, CagriSema. The candidate demonstrated a weight loss of 22.7% in treated patients over 68 weeks, lower than the guided weight loss of 25%. The failure favored Lilly whose Zepbound continues to maintain the best-in-class title for obesity treatment. Adding to the setbacks, Lilly’s Zepbound had earlier outperformed Novo Nordisk’s Wegovy (20.2% compared with 13.7%, respectively) in a weight-loss head-to-head study. This could result in a change in patient preference from Wegovy to Zepbound, again leading to a loss of market share.

Although NVO recently announced positive top-line data from an early to mid-stage study of its investigational candidate, amycretin, in overweight/obese patients, this is likely to be a short-term win for the company as amycretin is only in the early stages of development. We note that clinical development involves a high degree of risk. Clinching a nod for the pipeline candidates has become more difficult due to the tough regulatory environment.

How to Play NVO Stock

Given Novo Nordisk's recent challenges, short-term investors may want to consider selling the stock. Rising competition in the obesity market, coupled with Medicare's push for price reductions, has put pressure on NVO’s growth prospects. Additionally, supply constraints for its semaglutide medicines have exacerbated the situation. While the company has been making significant investments to increase production, it has yet to match the success achieved by Lilly.

Long-term investors who already own the stock should consider holding onto it, no matter how the fourth-quarter results pan out and the stock’s reaction to the results. Additionally, the company is working to expand the indications for Wegovy, Ozempic and Rybelsus, aiming to increase patient eligibility — a move that, if approved, could further boost revenues. Novo Nordisk is also developing innovative obesity treatments to maintain its competitiveness, particularly in the U.S. market, which offers substantial long-term growth potential. The recent decline in the stock price over the past three months presents an attractive entry point for new long-term investors.

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