Novo Nordisk Just Delivered Great News for Investors. Is a Comeback Finally Underway?

Are things finally starting to look up for Novo (NYSE:NVO)? The Denmark-based pharmaceutical leader has had a rough past couple of years, but its third-quarter financial results were strong enough to send the stock up 6% post-earnings. That's great news for shareholders, but can Novo maintain this momentum?

Image source: The Motley Fool.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

Novo's weight loss pill continues to perform well

At first glance, Novo's third-quarter results didn’t seem particularly impressive, as some of the company’s longtime growth drivers underperformed. For instance, sales of Ozempic, the company's famous diabetes medicine, were 29.7 billion Danish kroner (about $4.5 billion), down 3% compared to the year-ago period. The company's weight-loss medicine, Wegovy, recorded sales of 20.4 billion DKK (about $3.1 billion), roughly flat compared with the prior-year quarter.

However, several other medicines helped pick up the slack, and arguably none was more important than Novo's oral Wegovy. The company launched this weight loss pill -- the first of its kind to earn approval -- in January. The Wegovy pill has helped attract many patients who were hesitant to start treatment with injectables. Novo reported that, as of June, oral Wegovy had surpassed three million prescriptions, and more than 80% were for patients who had never taken GLP-1s before. In the third quarter, oral Wegovy generated 5.4 billion DKK (about $810 million) in revenue.

Novo's total net sales were 79.2 billion DKK (about $11.9 billion), up 6% year over year. The company's net income dropped by 16% year over year to 16.7 billion DKK (about $2.5 billion), largely due to non-cash impairment charges. Still, Novo’s results beat analyst estimates, and the pharmaceutical company also raised its guidance for the fiscal year 2026.

It now expects revenue to be flat (at the midpoint) year over year, while the previous guidance implied a 3% year-over-year drop at the midpoint. It's no wonder Novo's shares jumped following this beat-and-raise quarter. But what's next for the drugmaker?

More growth ahead

There are several catalysts ahead that could help Novo improve its financial performance. Let's consider three of them. First, the company could make meaningful progress with oral Wegovy. The medicine has now been approved in several other countries, including Germany and the U.K.

These markets might not be as lucrative as the U.S., but they should move the needle for the company. Novo will also likely attract brand-new GLP-1 patients in these regions. The company is also looking to earn label expansions for oral Wegovy. Novo has submitted an application to the U.S. Food and Drug Administration for oral Wegovy as a potential treatment for metabolic dysfunction-associated steatohepatitis.

The original injectable version of Wegovy is approved for this indication, but the pill offers a more convenient option. It could be successful in this niche and continue driving Novo's sales higher. Second, Novo will launch new products to strengthen its position in the diabetes and weight-loss markets.

It is inching closer to approval for CagriSema, a medicine that beat Wegovy in a head-to-head Phase 3 clinical trial for weight loss. CagriSema also posted strong clinical trial results in diabetes. This medicine could help Novo steal some market share from its biggest competitor, Eli Lilly (NYSE:LLY).

Third, Novo has several pipeline candidates that could improve its approved lineup over time. The company's Phase 3 pipeline features zenagamtide, a promising diabetes and weight-loss medicine that is being developed in subcutaneous and oral formulations.

The weight loss market is growing rapidly, and this product, along with others, may help Novo ride that tailwind for a long time, even as competition intensifies. Novo may still experience some clinical setbacks, but after the beating it took over the past two years, the company is slowly staging a comeback. In my view, the stock is attractive following its third-quarter results.

Prosper Junior Bakiny has positions in Eli Lilly and Novo Nordisk. The Motley Fool has positions in and recommends Eli Lilly and Novo Nordisk. The Motley Fool has a disclosure policy.