Novo Nordisk (NVO 1.82%) hasn't been getting much love on Wall Street. The stock trades down 66% from its 2024 highs and just took a big hit after the company offered weak guidance for 2026. However, for contrarian dividend investors, Novo Nordisk could be an undervalued opportunity.
First, Novo Nordisk's bad news
Novo Nordisk was the first company to introduce a GLP-1 weight loss shot. Unfortunately, it couldn't keep up with demand, which allowed compounded versions of the company's Wegovy to be sold. And Eli Lilly (LLY 2.05%) launched its own GLP-1 drug, which proved more effective. So, at this point, Eli Lilly's Mounjaro and Zepbound are the leaders in the GLP-1 space.
Image source: Getty Images.
Adding to the company's woes is Novo Nordisk's weak guidance for 2026. Unlike Eli Lilly, which offered strong guidance, Novo Nordisk is expecting revenue and earnings to fall this year. Part of that comes from an agreement with the U.S. government around drug pricing. It is easy to see why Novo Nordisk is viewed as an also-ran in the GLP-1 space right now.
There's good news about Novo Nordisk
However, the news isn't all bad. Novo Nordisk was first to market with a pill version of its GLP-1 drug, beating Eli Lilly to the punch. That gives the company time to regain market share before Eli Lilly launches its own pill. Consumers tend to prefer pills to shots, for obvious reasons, and the uptake on Novo Nordisk's pill has been very strong. The hope is that the pill dramatically increases the number of customers taking GLP-1 drugs.
NYSE: NVO
Key Data Points
Also, the company is working on an updated version of its GLP-1 drug that is more competitive with Eli Lilly's offering. And Novo Nordisk appears to be taking a more aggressive approach with generic competitors, which could help it squeeze these players out now that the company's GLP-1 drug production is keeping up with demand.
Novo Nordisk looks cheap
Meanwhile, Novo Nordisk's price-to-earnings ratio is 13.5, compared to Eli Lilly's 45. And Novo Nordisk is offering an attractive 3.7% yield compared to Eli Lilly's 0.6%. Novo Nordisk's dividend is well supported, too, with a payout ratio of roughly 40%. While 2026 may be a turnaround year, there are compelling reasons to be positive about the future. If you are a dividend investor or have a value bias, you'll likely find Novo Nordisk an attractive option in the GLP-1 space.
