Novo Nordisk (NVO -0.92%) has become one of the hottest names in healthcare. Its diabetes medication Ozempic has become a household name and a trending topic on social media. People have been using the drug to help lose weight, and they are achieving incredible results. It has been so disruptive it even has businesses in other industries, appreciate snacking, having to answer questions about the possible implications Ozempic may have on their operations and growth prospects.
Understandably, this has made Novo Nordisk stock incredibly popular with investors. This year alone, its shares are up over 40%. How large would your gains be if you had invested in the stock five years ago, before Ozempic became a game changer for the business?
Where Novo Nordisk was trading five years ago
On the first trading day of December 2018, you could have bought Novo Nordisk stock for about $46. If you had invested $10,000 into the stock back then, you would have acquired approximately 217 shares.
Earlier this year, the healthcare company split its shares 2-for-1, which would have turned those 217 shares into 434 shares, each worth half as much — so the event wouldn’t have any direct impact on the total value of your investment. However, splitting shares and bringing down their price can help a company better its stock’s liquidity. It can also make the stock appear more attractive to retail investors.
Today, shares of Novo Nordisk trade at around $95, so a stake of 434 shares would be worth approximately $41,230. That amounts to a price gain of 312%. By comparison, an equal investment in the S&P 500 would be worth around $16,800. Novo Nordisk, thanks to the soaring popularity of Ozempic, has trounced the market over the past five years.
There could still be more growth to come
As well as Novo Nordisk has performed in recent years, this is still a stock with plenty of room to get more valuable in the future. Ozempic isn’t technically the company’s weight-loss drug — that’s Wegovy, which has the same active ingredient, semaglutide, and which can be prescribed at a higher maximum dosage. Patients have simply been using Ozempic off-label for that purpose because of how effective it has been.
Wegovy is still in the early stages of its rollout. In addition to the U.S., it is available in Denmark, Norway, Germany, the U.K., and Iceland. The company also plans to launch it in Japan by February. But Novo Nordisk has had to limit the rollout in some markets because supplies of the drug remain limited relative to demand.
Through the first nine months of the year, Wegovy generated sales totaling 21.7 billion Danish kroner ($3.1 billion) and has accounted for 13% of the company’s total revenue. Wegovy’s sales are nearly 6 times what they were this time last year, and yet there is still much more growth to come. The company is planning to invest $6 billion to enhance its production capacity, which should help alleviate the supply limitations and help pave the way to more revenue growth in the future for Wegovy and other drugs.
It’s not too late to invest in Novo Nordisk
Novo Nordisk’s stock surged over the past five years, but there’s no reason to think that it can’t continue to rise in the next five years as well. As well as the company has performed, there’s still plenty of potential for Novo Nordisk to become more valuable in the future, particularly as Wegovy becomes a bigger name in weight loss.
For long-term investors, now is as good a time as any to load up on shares of Novo Nordisk. The healthcare giant still has a bright future ahead of it.
