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A Unique Look at a Hot Pharma Stock

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What's Next for Novo Nordisk?

James Ogletree, Senior Managing Editor, The Oxford Club

James Ogletree

Today, we're doing something we've never done before.

In this special "new year" edition of Wealthy Retirement, we're running a stock through the Safety Net model and The Value Meter... at the same time.

Using these two popular methodologies in tandem - one for dividend safety, the other for valuation - can give us a more complete picture of whether a stock is worth investing in.

Without further ado, here's the first-ever combined edition of Safety Net and The Value Meter... featuring a company that just made a potentially industry-changing announcement.



Marc Lichtenfeld

Chief Income Strategist Marc Lichtenfeld

Safety Net

 

Now that the calendar has turned to 2026, lots of folks are making promises to themselves that they won't keep. However, one resolution just got much easier.

Losing weight.

GLP-1 (glucagon-like peptide-1) drugs have been game changers for patients and the pharmaceutical companies that make them. Now, oral GLP-1 drugs will again move the needle significantly for customers and drugmakers.

Last week, Danish pharmaceutical giant Novo Nordisk (NYSE: NVO) received FDA approval for an oral version of Wegovy, which was previously available by injection only. The change to the company's financial picture will be momentous.

We won't have the full 2025 figures until next month, but free cash flow is projected to come in at $7.7 billion, a 28% decline from 2024's $10.7 billion and 36% below 2023's total.

However, because of the new approval, free cash flow is expected to jump 34% to $10.3 billion in 2026 and another 27% in 2027 to $13.2 billion.

Chart: Novo Nordisk (NYSE: NVO)
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The sharp decline in 2025's free cash flow costs Novo Nordisk a couple of points on its dividend safety rating.

But could the expected influx of cash "slim down" the risk of a dividend cut?

Find Out NVO's Safety Net Grade

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The Value Meter

 

Sometimes the best businesses make only decent stocks - not because the company slips, but because expectations outrun what the cash can reasonably deliver.

That's the situation with Novo Nordisk today. The business is still excellent. The stock, after a long reset, is finally being treated with more discipline.

Chart: Novo Nordisk (NYSE: NVO)
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The company is the unquestioned global leader in diabetes and obesity treatments. And Ozempic and Wegovy - overnight name brands, it seems - have reshaped how investors think about the company.

For a while, the market assumed that dominance meant inevitability. But recent results remind us that even great businesses have limits.

Over the first nine months of 2025, sales rose 12%, or 15% at constant exchange rates. Operating profit increased 5%, held back by roughly 9 billion kroner (roughly $1.4 billion) in restructuring costs tied to a companywide transformation. Free cash flow came in at 63.9 billion kroner (about $10.1 billion). That's lower than the previous year, but still substantial.

Capital spending climbed as Novo expanded its manufacturing capacity. That spending isn't optional. It's the cost of staying competitive in GLP-1 therapies. Management also narrowed guidance and lowered growth expectations for diabetes and obesity treatments.

With the stock down over 60% from its mid-2024 highs, let's see what The Value Meter has to say about its current valuation.

Find Out NVO's Value Meter Score
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