President-elect Donald Trump has asserted that, due to national security interests, he intends to acquire Greenland and incorporate it as part of the United States.
Beyond security, Greenland is rich in rare-earth elements and has a plethora of oil and gas deposits, further enhancing its allure for Trump. Notably, Trump has even threatened to hit Denmark with his favorite weapon - tariffs - to force the Scandinavian country to give up the world’s largest island. Greenland is an autonomous territory of Denmark.
Greenland is geographically closer to the North American mainland than to Denmark. While Copenhagen manages its foreign affairs and defense, the United States also plays a role in Greenland's defense under a 1951 treaty, which allows the U.S. to operate an Air Force base on the island.
Amid these developments, prominent Danish companies that have their stocks listed on U.S. exchanges have come under pressure. Stakes are the highest for pharma giant Novo Nordisk (NVO), which has the highest market capitalization among all listed Danish stocks in the U.S., and its shares are already down 21% over the past month. However, the wider analyst community still remains bullish about the company.
About Novo Nordisk Stock
Founded in 1989 Novo Nordisk is a global healthcare company specializing in the treatment of serious chronic diseases, including diabetes, obesity, rare blood and endocrine disorders, and cardiovascular diseases.
Valued at a market capitalization of $387.1 billion, NVO stock is down 21% over the past 52 weeks.
Exciting Developments
Novo Nordisk, alongside American competitor Eli Lilly (LLY), dominates the global insulin market, focusing on diabetes care. Novo Nordisk has developed semaglutide, a drug based on GLP-1 receptor activation, which increases pancreatic insulin release in response to food. Originally designed to treat type 2 diabetes, semaglutide has also shown significant weight-loss benefits.
Novo Nordisk markets semaglutide under different brand names depending on its purpose. Its options include Ozempic, administered via weekly injections, and Rybelsus, taken orally once daily. Both drugs have contributed to Novo Nordisk holding 44.5% of the global insulin market, compared to Eli Lilly's estimated 20%-25% share.
With the recent launch of Wegovy in China and strong sales growth for Ozempic in the region last year, Novo Nordisk is poised for continued growth. The company is also exploring new applications for semaglutide in treating Alzheimer’s disease, metabolic dysfunction-associated steatohepatitis (MASH), and cardiovascular disease. Phase 3 trials have shown promising results, including a 14% reduction in major adverse cardiovascular events (MACE) with oral semaglutide and significant improvements in liver fibrosis for MASH patients.
Additionally, Novo Nordisk is developing combination therapies and testing innovative treatments like Monlunabant, a cannabinoid receptor inverse agonist for obesity, which has shown positive results in Phase 2 trials.
Novo Reports an Upbeat Q3
After a muted second quarter, Novo Nordisk rebounded with a strong showing in Q3. Its net profit in the third quarter came in at 27.3 billion Danish kroner, or $3.92 billion. That was above the estimate of 26.95 billion Danish kroner. Its sales of Wegovy jumped 79% year-over-year to 17.3 billion Danish kroner, also beating estimates.
Encouragingly, the company increased its revenue guidance for the year from 22%-28% to 23%-27%. Analysts are also expecting the company to report revenue and profit growth ahead of the industry at 22.49% and 29.53%, compared to the sector medians of 7.65% and 10.81%, respectively.
Overall, the company closed the quarter with a cash balance of DKK 57,018 million which was much higher than its short-term debt levels of DKK 29,599 million.
What Do Analysts Think About NVO Stock?
Taking all of this into account, analysts have attributed an overall rating of “Strong Buy” for the stock with a mean target price of $126.75 which denotes upside potential of about 47% from current prices. Out of 16 analysts covering the stock, 12 have a “Strong Buy” rating, 3 have a “Hold” rating, and 1 has a “Moderate Sell” rating.
