Weight-loss drugs and the issue of obesity have grabbed the attention of Wall Street, helping to drive massive gains in Novo Nordisk stock and Eli Lilly. Now investors face the dilemma that eventually comes to all huge winners like Lilly and Novo Nordisk: how to handle late-stage bases.
Novo Nordisk has seen strong demand for its Ozempic and Wegovy treatments for diabetes and weight loss. As a result, its shares have soared 297% since breaking out from a double bottom base in April 2021 until hitting an all-time high earlier this month. Novo Nordisk remains in buy range from a cup with handle. As a fourth-stage base, this latest breakout could still drive even more gains, but risk is elevated.
Eli Lilly, maker of weight-loss drug Zepbound, has also skyrocketed in recent years. And since breaking out of a first-stage cup in January 2021, Lilly stock has soared 414%, as of Friday's close. Now extended beyond buy range, the drugmaker's most recent chart pattern was a sixth-stage base.
For both Novo Nordisk and Eli Lilly, investors should stick to rules for both how to buy stocks and when to sell stocks to lock in gains.
Shares In Demand — And In Good Company
Right alongside Wall Street powerhouse Nvidia, Novo Nordisk stock earns a spot on the IBD 50, IBD Sector Leaders and IBD Leaderboard.
Other signs of demand include an A- Accumulation/Distribution Rating and a 1.6 up/down volume ratio.
With a 98 Composite Rating, Novo Nordisk stock outpaces 98% of all stocks in terms of the most important stock-picking factors. Eli Lilly earns the highest-possible score of 99.
Novo Nordisk: Riskier But Still Rocking
Investors should remain cautious given the later-stage status of Novo Nordisk's base. That said, the company continues to produce positive fundamentals while the stock shows noteworthy technical action.
On fundamentals, the drugmaker is expected to deliver a 24% gain in earnings this year to $3.41 a share. In 2025, analysts forecast a 21% gain to $4.14 a share. The company earns a high SMR Rating of A. That metric tracks sales growth, profit margins and return on equity.
In terms of technical strength, the 21-day exponential moving average popped back above the longer-term 50-day line last month and continues to rise.
The relative strength line remains within striking distance of the 52-week high it hit earlier this month.
As this week — shortened for Wednesday's Juneteenth holiday — gets underway, Novo Nordisk is down a little over 1% in light volume. Shares remain in buy range.
Lilly stock continues to rise and trade right around its all-time high.
