Weight-Loss Drug Wegovy Adds Mass To Novo Nordisk's stock, Pushing Valuation Past Denmark's GDP

Shares of weight-loss drug manufacturers came to the party last week on the back of positive news flow from these companies.

What Happened: Danish drug giant Novo Nordisk A/S NVO said its first-half sales and net profit jumped 29% and 43% year-over-year, thanks to a 367% jump in the sales of its weight-loss drug Wegovy. More importantly, the company raised its outlook for the year.

Notwithstanding the positive results, the stock settled the session down about 2.9%. The muted reaction was due to the strong gains the stock racked up on Thursday, when it reported positive results for a study that evaluated Wegovy as a preventative option for major cardiovascular events such as a stroke and heart failure.

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Why It's Important: Novo Nordisk's NYSE-listed stock is up over 35% year-to-date, outperforming S&P 500 Index's 16.3% gain and the iShares Biotechnology ETF's IBB 2.01% decline.

The gains have given Novo Nordisk a market capitalization of $410.71 billion. Incidentally, the GDP of Denmark, where Novo Nordisk is headquartered, was at $395.4 billion, trailing the biopharma company's valuation.

Novo Nordisk has the biggest weighting in the OMX Copenhagen 25 Index, the benchmark index of the Danish stock exchange, with a 17.09% weighting.

The weight-loss windfall could continue in the near term. Ex-hedge fund manager Whitney Tilson said in his firm Empire Financial’s daily newsletter that the uptake of weight-loss drugs could get a boost if they receive FDA approval for the added indication of preventing major cardiovascular events.

This is because of an increasing willingness to take the drug and the increased probability of payers, both governments and health insurers, providing coverage, he added.

Novo Nordisk's U.S.-listed stock ended Friday's session at $181.60, down 0.27%, according to Benzinga Pro data.

Read Next: Novo Nordisk’s Weight-Loss Drug Wegovy Launches In Germany: Patients To Pay Out-of-Pocket

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