Novo Nordisk A/S (NVO): Is It The Most Oversold Healthcare Stock to Buy Now?

Novo Nordisk A/S (NVO), the Danish pharmaceutical giant, has been facing a challenging period in the stock market, with its shares down 32.47% in the last 52 weeks. However, this decline has left the stock trading at a significant discount, raising the question: is Novo Nordisk the most oversold healthcare stock to buy now? To answer this, we must examine the company's financial performance, growth prospects, and the factors contributing to its recent decline.

Novo Nordisk's financial performance and growth prospects remain strong. The company reported a 25% increase in sales measured in Danish kroner and a 26% increase at constant exchange rates (CER) to DKK 290.403 billion in 2024. Its operating profit performance and effective tax rate were in line with guidance, and the company maintained a strong gross margin of 84.7% and operating margin of 48.17%. Despite a net cash position of -DKK 10.62 billion, Novo Nordisk's free cash flow was DKK 10.38 billion, reflecting its robust financial health.



One of the primary factors contributing to Novo Nordisk's recent decline is the supply constraints and drug shortage notifications for its key product, Ozempic. The company has experienced periodic supply constraints, which have led to related drug shortage notifications across geographies. This issue has likely contributed to investor uncertainty and the stock's recent decline. However, Novo Nordisk has been working to address these supply constraints and is expected to resolve them in the near future.

Another factor is the potential price cuts and increased competition in the obesity drug market. The U.S. government is considering using Novo Nordisk's Wegovy weight-loss drug in a program that negotiates lower prices for Medicare in 2027. This could lead to significant price cuts for Wegovy and similar drugs, making them more affordable for people over 65 on Medicare Part D plans. While this potential price cut could impact Novo Nordisk's revenue and profitability, the company's strong financial performance and growth prospects suggest that it can navigate this challenge and continue to deliver value to shareholders.

Novo Nordisk's past acquisitions for both greater production capacity and logistical flexibility will reap benefits through geopolitical risk mitigation and broader product menu options. Additionally, the company's strategic initiatives, such as expanding into untapped markets like China, could contribute to a turnaround in its stock performance. As the market becomes more comfortable with Novo Nordisk's ability to manage these challenges, the stock may become less oversold.



In conclusion, Novo Nordisk A/S (NVO) may indeed be the most oversold healthcare stock to buy now, given its strong financial performance, growth prospects, and the temporary factors contributing to its recent decline. As the company works to address supply constraints and navigate potential price cuts, investors can expect a recovery in its stock price. However, it is essential to monitor the company's progress and remain vigilant to any new developments that may impact its financial performance and growth prospects.