Why Novo Nordisk Stock Was a Winner Today

One of the healthcare stocks of the moment, Novo Nordisk (NVO 2.95%), had a good Tuesday on the market. Investors pushed its price 3% higher, more than double the percentage rate increase of the S&P 500 index, on the back of a positive move by an analyst.

Included on the Argus focus list

That action occurred late Monday afternoon, when Argus Research director Jim Kelleher added Novo Nordisk to his company’s focus list. It made the lineup along with three other stocks: Domino’s Pizza, Shell, and Capital One Financial.

While this isn’t the first positive analyst move with the Denmark-based pharmaceutical company, it bolsters the case for investors to buy it. The company has risen to prominence thanks to a pair of medications based on its molecule semaglutide — diabetes drug Ozempic and, especially, obesity treatment Wegovy.

In an analyst note regarding the new inclusions on the focus list, Kelleher and his team waxed enthusiastic about Novo Nordisk’s continued success. They pointed out that it has a “robust” pipeline, which includes the exploration of other indications for semaglutide and a potential treatment for hemophilia.

Not the only horse in the race, however

Novo Nordisk unarguably has strong momentum at its back, with Ozempic/Wegovy in hot and apparently sustainable demand from the American public. It’s also clearly not a company resting on its laurels, as that stuffed pipeline indicates.

While it’s easy to accept the buy argument for the stock, though, potential investors should be aware that competition is intensifying. Deep-pocketed American pharmaceutical powerhouse Eli Lilly recently won Food and Drug Administration approval for its own obesity treatment, Zepbound. Other biotechs and pharmaceutical companies are laboring to bring similar medications to market.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Domino’s Pizza. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.

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