Novo Nordisk Just Lost $60 Billion in Market Cap
A quick breakdown of the sales warning, CEO replacement, and why the sell-off looks overly harsh
Two days ago, Novo Nordisk dropped a double press release.
A sales warning and the appointment of a new CEO.
Double the trouble, twice the fun? In this case, not really.
The stock fell 20% on the day of the announcement. Another 6% followed the next day. That’s over $60 billion in market cap vanished.
Here’s my quick update prior to the earnings release next week.
Novo Nordisk in Trouble?
Let’s take a step back.
Imagine a company that’s compounded revenue at nearly 20% annually over the past five years. Over the last two, it even accelerated to a 28% CAGR. This isn’t some obscure small-cap. In 2024, it generated ~$44 billion in revenue. That kind of growth at that kind of scale is quite rare.
More impressive still, it’s reinvesting aggressively—expanding its capital base year after year. Yes, ROIC is down. But that’s coming off a sky-high base above 60%, and the decline reflects a lag between investment and profit, not a deterioration in quality. Even now, ROIC of this completely unfamiliar business sits close to 40%.
Now, growth is expected to slow next year: 8% to 14%, which is still solid considering the size. Operating profit is expected to grow faster: 10% to 16%. Capex remains high at around $10 billion, showing no signs of letting up on reinvestment.
And the best thing? You can buy this business today at a forward P/E of around 10.
Of course, the company is Novo Nordisk. And of course, it’s not that simple. But I’d bet if I gave you these numbers and left out the name, you’d be interested.
It’s not that simple because expectations have come down—twice this year, in fact. Revenue growth was originally guided at 16-24%, and operating profit guidance fell from 19-27% to 10-16%. That’s a big reset.
The revised outlook reflects slower growth for Ozempic and Wegovy in the U.S., plus weaker-than-expected growth for Wegovy internationally. Much of this ties back to the compounded GLP-1 issue, which is made illegal since May 22, yet still widely sold under the false pretense of ‘personalization’. Eli Lilly faces the same problem. The FDA is cracking down, but Novo Nordisk can’t control this problem.
Even so, the market keeps growing, and Novo keeps growing with it.
The other news: Novo finally named a new CEO, following the May announcement that Lars Fruergaard Jørgensen would step down.
He’ll be replaced by Maziar Mike Doustdar, currently Executive Vice President of International Operations. Doustdar has been with Novo since 1992 and has held the EVP role since 2015. Under his leadership, international sales have doubled.
We’ll have to wait and see how capable Doustdar proves to be, but he wasn’t chosen without reason.
Now, I updated my valuation from earlier this month. Aside from the lower guidance, nothing material has changed. Year 1 revenue growth is now locked at 11%, and operating profit at 13%, tapering from there. That means the model assumes no rebound.
Monte Carlo results:
Mean value: 399.12 DKK
Range: 317.73 DKK to 514.37 DKK
10th percentile: ~362 DKK
The current share price of 325 DKK is at the very low end of the range.
So yes, expectations have been reset—rightfully—but the market reaction looks too harsh. I still believe Novo Nordisk is undervalued.
We’ll get more clarity in next week’s earnings release. I’ll cover it in detail.
Thanks for reading.
Lucas
Author & Founder, Summit Stocks
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Disclaimer: the information provided is for informational purposes only and should not be considered as financial advice. I am not a financial advisor, and nothing on this platform should be construed as personalized financial advice. All investment decisions should be made based on your own research.