Is this an Opportunity?

Last night, NVO share price fell by 21%. To give some perspective of this drop, NVO lost over $90bn in market cap in a single day! But before anyone writes it off, here’s what’s really at play… and where it could still go wrong.

What triggered the panic?

• Novo cut its 2025 sales forecast to just 8–14% growth (down from 13–21%), and operating profit growth forecast slashed to 10–16% from 16–24% citing slowing uptake in the US and international markets, plus continued use of compounded (copycat) GLP‑1 drugs in the U.S.

• The company announced a CEO shakeup—appointing Maziar Mike Doustdar to replace the ousted Lars Jørgensen, raising concerns about execution and U.S. strategy.

• Illegal compounding of Ozempic and Wegovy continues to eat into sales and margins, as regulators and courts struggle to clamp down.

A few reasons behind this:

• Demand remains strong, but they’re struggling to scale fast enough to meet it.
• Compounded, copycat versions of their GLP-1 drugs like Ozempic and Wegovy continue to erode their U.S. market share.
• Leadership changes added uncertainty — the CEO was replaced and while the new guy is a seasoned insider, any transition brings a risk of execution hiccups.
• Analysts and the market were expecting perfection. When you’re priced for perfection, any crack in the narrative gets punished hard.

Is the growth story broken?

Not at all. In fact, this is still one of the most compelling long-term healthcare stories out there.

Here’s what the market seems to be missing:

• GLP-1 drugs are still in their early innings. They’re not just used for diabetes or obesity anymore — there’s emerging evidence for cardiovascular risk reduction, kidney protection, even potential benefits in addiction and Alzheimer’s.
• Despite guidance cuts, first-half sales were still up ~18% YoY, and operating profit rose ~29%.
• Margins are still world-class — we’re talking over 75 percent gross margins and 50 percent operating margins.
• The company is pouring billions into scaling manufacturing with new facilities coming online in the next 12 to 24 months.

This isn’t a demand issue. This is a supply bottleneck and temporary commercial headwinds in the U.S.

Valuation check

Before the sell-off, Novo was trading at about 44 x forward earnings. Now, it’s closer to 16x. If you consider EV/EBIT it is 11x. You have a dominant company in one of the fastest-growing areas of medicine, and double-digit revenue growth trading at low teens.

If you believe the GLP-1 category will grow into a 150 to 200 billion dollar market by 2030 — and Novo continues to defend its leadership — then the stock today could be setting up for strong long-term returns.

Intrinsic value models put Novo's fair value around 40 to 70 percent higher than current levels.

What can go wrong?

This isn’t a risk-free play. Here’s what I’m watching closely:

• Competition is heating up. Eli Lilly’s drugs like Mounjaro and Zepbound are gaining traction and could threaten Novo’s dominance.
• Copycat GLP-1s in the U.S. are still being used and regulators haven’t clamped down fast enough. This eats into both sales and margins.
• U.S. pricing pressure is real. Politicians and insurers are starting to push back against the high price of obesity drugs, which could hurt profitability.
• Some patents on key drugs may start expiring in the next few years, especially by 2026, which could open the door to generic competition.
• The new CEO may take time to rebuild trust and show that execution won’t falter during this leadership change.

So yes, there are many headwinds and this is not a sure win. But to me, it looks like the market has priced in too much fear too fast.

🧠 Pete’s View: Opportunity With Caution

This is a classic case of sentiment turning faster than fundamentals. Short-term pain? Absolutely. But long-term, if Novo maintains its edge in GLP-1 and scales production successfully, this drop could be a chance to enter a quality business at a much better price.

Would I go all-in here? Probably not. But for long-term investors, this looks like a good moment to start building a position slowly, especially if the volatility continues. But despite this, the business isn’t broken. Their moat still exists: strong IP, global scale, expansion plans, and a massive market.

So here's my take:

• If you're a long-term investor comfortable holding through uncertainty, this drop presents a lower-risk entry opportunity.

• But if you think competition and pricing reforms will continue to accelerate, or management fails to regain commercial footing, this could be a longer-term drag.

I'm treating NVO as a gradual accumulation at these levels—not an all‑in opportunistic bet.

Quick heads-up before I go

If you're thinking of buying NVO or just want to park cash smartly while waiting for more dips — this is your last chance to grab the Longbridge July offer. I don’t usually hype promos but this one’s strong.

🎁 

LAST 2 DAYS — Longbridge July Promo

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Use code: UI7YXGF0
Offer ends 31 July 2025, 11:59 PM SGT

Important note — the extra 6 percent interest booster is only available through this link and code. I suspect rates will fall soon, so this could be your last chance to lock that in.

Catch you in the next one. Stay patient, stay rational, and keep taking advantage of the market’s mood swings.

Pete
Invest with Pete

🚨‼️ By the way, I’ll never PM anyone on telegram or any other social media platforms. If you receive any “Pete” messaging you, these are scammers impersonating me. Pls beware!

The information provided in this newsletter is for informational purposes only and does not constitute financial advice. Readers should seek their own independent financial advice before making any investment decisions. Please note that while Pete is a portfolio manager, the opinions expressed in this newsletter are his own and do not represent the views of any organization. Always perform your own research and due diligence before investing.