Healthcare Stocks Are Sinking. Here Are 2 to Buy on the Dip.
Key Points
Eli Lilly has a lofty 46 price-to-earnings ratio.
Two other drugmakers have P/Es that are less than half of Eli Lilly's P/E.
Eli Lilly's 0.6% yield is tiny compared to the up to 6.3% yield you can get with these two competitors.
- 10 stocks we like better than Pfizer ›
There are almost always some companies doing well, even when competitors in the same industry are sinking. Right now, investor enthusiasm has GLP-1 weight loss drug leader Eli Lilly (NYSE: LLY) riding high, with a lofty price-to-earnings ratio of 46. Its dividend yield is a tiny 0.6%(in part, because of its strong share-price performance).
The sinking shares of competitors Novo Nordisk (NYSE: NVO) and Pfizer (NYSE: PFE) will be much more attractive if you are a contrarian, have a value bias, or are a dividend lover. Here's what you need to know.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Novo Nordisk is the second fiddle
Eli Lilly's 2025 revenue was supercharged by its Mounjaro (for diabetes) and Zepbound (for weight loss) GLP-1 drugs. Mounjaro's sales rose 99% in 2025, while Zepbound's sales jumped 175%. By comparison, Novo Nordisk's obesity drugs only experienced growth of 31% in 2025.
Most people would consider 31% growth a strong showing, but when you compare it to Eli Lilly, it appears rather paltry. Worse, Novo Nordisk is warning that a pricing agreement with the U.S. government will lead to weak financial results in 2026.
Image source: Getty Images.
Investors have pummeled the stock price, which is down 66% since mid-2024. This could be a buying opportunity for long-term value investors. Notably, the P/E ratio is 13, and the 3.9% dividend yield is well covered, given the 40% payout ratio.
The big story, however, is Novo Nordisk's newly introduced GLP-1 pill, which could greatly expand the number of consumers willing to use the company's weight loss medication. The company expects improved performance in 2027.
Pfizer is playing catch-up
Pfizer's internally generated GLP-1 drug candidate was unsuccessful. The company is attempting to catch up to Eli Lilly and Novo Nordisk via partnerships and acquisitions.
However, Pfizer has a long and successful history of innovation. It may not be leading the pharmaceutical sector right now, but it has in the past and is highly likely to do so again. In addition to GLP-1 drugs, the company is also seeing research success with oncology and migraine treatments.
If you don't mind a turnaround story, Pfizer could be a good fit for your portfolio. It comes with a lofty 6.3% dividend yield, though the payout ratio is above 100% right now.
More conservative dividend investors will probably be better off with Novo Nordisk. However, for contrarian types, the dividend is really just icing on the cake if it survives the current weak patch. For reference, the P/E ratio is around 20.
Time for a deep dive
Pfizer and Novo Nordisk stocks are sinking right now, but that could be an opportunity for investors who think long term. Sure, you'll be buying while others are selling, which is emotionally challenging. However, you'll also be picking up stocks that look like bargains relative to industry leader Eli Lilly.
Should you buy stock in Pfizer right now?
Before you buy stock in Pfizer, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Pfizer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $443,353!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,155,789!*
Now, it’s worth noting Stock Advisor’s total average return is 920% — a market-crushing outperformance compared to 196% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of February 11, 2026.
Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
Recommended Articles
