Novo Nordisk's Rebound Highlights Oral Wegovy Promise Amid Lingering Price and Competitive Risks

What happened

Novo Nordisk's stock has rebounded over 40% from its 2025 lows, driven by renewed optimism for the January 2026 launch of oral Wegovy, which recorded over 3,000 U.S. prescriptions in its first week. This recovery follows a severe 2025 sell-off triggered by multiple guidance cuts due to U.S. price compression, compounded semaglutide competition, and investor fears over GLP-1 margin erosion. Despite the technical bounce, fundamental challenges persist, including intense duopoly competition with Eli Lilly, political pressures from programs like TrumpRx, and state Medicaid cuts capping obesity drug access. Market sentiment has shifted from viewing Novo as an unassailable GLP-1 leader to a pressured incumbent navigating a maturing franchise with elevated execution risk. Upcoming Q4 results will be pivotal in assessing whether oral Wegovy can drive incremental volume growth without further net price declines amid these headwinds.

Implication

The oral Wegovy launch offers a new growth avenue, but its long-term impact hinges on expanding the patient base beyond injection-tolerant users without significant cannibalization. Persistent price wars with Eli Lilly and policy uncertainties, such as Medicaid retrenchment, threaten to compress margins even if volumes grow, challenging Novo's ability to sustain high-single-digit GLP-1 revenue growth. At current prices near $62, valuation assumes a stable base case, yet further guidance cuts or oral adoption stumbles could quickly validate the bear case implying downside to $50. Investors should closely monitor Q4 results for evidence of improving price/volume mix and oral script trends before considering increased exposure. Position sizing should remain moderate, reflecting the asymmetric setup where downside is buffered by diabetes demand but upside is capped by competitive and political risks.

Thesis delta

The DeepValue report's potential buy thesis, with an asymmetric setup favoring gradual accumulation, remains unchanged as oral Wegovy's launch supports volume growth prospects. However, the rebound has reduced the margin of safety by pricing in more optimism, increasing the stakes for upcoming execution on oral uptake and margin trajectory. No fundamental shift is warranted, but investors must now weigh the reduced discount against heightened near-term catalysts and risks.