Is Novo Nordisk Stock a Buy Right Now?

Over the last couple of years, Danish company Novo Nordisk (NYSE: NVO) has evolved from a relatively obscure pharmaceutical business to perhaps the biggest rising star in healthcare.

The company's breakthroughs with glucagon-like peptide-1 (GLP-1) agonists gave birth to a host of blockbuster medications that are used to treat diabetes and obesity. Chief among its offerings are Ozempic and Wegovy.

Below, I'll assess Novo Nordisk's recent third-quarter earnings report, and provide some details on why I'm bullish on the company's long-term road map. Let's explore whether scooping up shares looks like a good opportunity right now.

How was Novo Nordisk's latest earnings report?

Through the first nine months of 2024, Novo Nordisk's revenue increased by 24% year over year to 205 billion Danish krone (approximately $29 billion).

The company divides reported GLP-1 revenue into two categories so that investors can get an idea of how each option is performing. Through the first nine months of the year, sales of injectable GLP-1 diabetes treatments Ozempic and Victoza increased by 26% year over year. In addition, the company's oral GLP-1 medication Rybelsus posted an impressive growth rate of 29% year over year.

Within obesity care, Wegovy and its sibling treatment Saxenda continue to shine -- combining for 44% growth year over year through Sept. 30.

Although it's clear that Novo Nordisk's GLP-1 treatments are a real hit, what do these growth rates really mean? Well, consider that over the last three years, the number of patients globally who are using its GLP-1 treatments have tripled, which translates to 65% of the market in terms of patient volume. To put this into perspective, its chief rival in the weight loss space, Eli Lilly, has an estimated 32% market share.

By all accounts, Novo Nordisk is firing on all cylinders, and the competition isn't even close. And what's even more encouraging is that its lead could widen.

Image source: Getty Images.

The long-term outlook is robust

Generally speaking, pharmaceutical companies tend to explore additional use cases and applications for their biggest drugs. Diabetes and obesity are no exceptions, as both conditions are often correlated with other important aspects of patient care.

Earlier this year, Wegovy received an expanded indication from the Food and Drug Administration (FDA), which allows it to be prescribed for patients with obesity who are also at risk of cardiovascular conditions such as stroke or hypertension.

On top of that, Wegovy also received approval in China this year. While Novo Nordisk's revenue growth in China is a comfortable 10%, this region only represents 3% of the company's total international sales.

The combination of expanded indications, and a marketplace that is completely untapped and free for the taking outside of core markets in the U.S. and Europe, should serve as strong tailwinds. These factors should add even more momentum to the company's already-gigantic lead over Eli Lilly.

Finally, Novo Nordisk has done a great job of reinvesting its capital into additional research and development (R&D) -- underscored by an impressive pipeline of candidates focused on augmenting the company's existing GLP-1 roster.

Is Novo Nordisk stock a buy right now?

As of this writing, Novo Nordisk is trading at a forward price-to-earnings (P/E) multiple of 31.5. While this is considerably higher than the average forward P/E of the S&P 500, the trends depicted in the chart below suggest that now could be a great time to pounce on Novo Nordisk stock:

NVO PE Ratio (Forward) data by YCharts.

Shares are trading at their lowest forward P/E multiples this year, thanks to a prolonged sell-off in the stock that's been going on since the late summer. As an investor in Novo Nordisk, I'm not reading too much into the sell-off. A few months ago, the capital markets experienced some outsized volatility as investors remained uncertain about the condition of the economy, the outcome of the presidential election, and a host of other things.

Now that the Federal Reserve has started tapering rates, and Donald Trump has become president-elect, a substantial amount of near-term uncertainty has evaporated. Nevertheless, I think the long-term case for investing in Novo Nordisk is intact and pretty obvious.

The company has a huge lead over the competition. Its pipeline includes several promising candidates that could propel its existing lead even further, and its core growth engines of diabetes and obesity care are on the doorstep of entering new markets.

I think that if you're an investor with a long-term time horizon, right now is a terrific opportunity to buy shares of Novo Nordisk. I see it as a compelling buy-and-hold stock, and believe that its best days are ahead.

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Adam Spatacco has positions in Eli Lilly and Novo Nordisk. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.