The Semaglutide Cliff vs. a 10x Multiple: Is Novo Nordisk (NVO) a Value Trap or a Bargain?

The Semaglutide Cliff vs. a 10x Multiple: Is Novo Nordisk (NVO) a Value Trap or a Bargain?

Venkatesh Srinivasalu

Mon, September 21, 2026 at 2:23 AM GMT+3 3 min read

Morgan Stanley has cut Novo Nordisk A/S (NYSE:NVO) to Underweight on September 11, 2026. Semaglutide, the underlying molecule for Wegovy and Ozempic, generates roughly 75% of 2026 revenue. Morgan Stanley models that it will still represent 59% of total sales when its patent protection expires in 2031. And according to the firm, the valuation does not price in the impact it has on Novo's terminal value. The stock, currently trading at 10.6x earnings and down 33% from its 52-week high, slipped another 2% following the call. At this point, the question isn't about whether the patent cliff is real or not, but whether the 10x multiple reflects an actual bargain.

The Bear Case

Semaglutide loses exclusivity in Europe in 2031 and the US in 2032. And Morgan Stanley believes Novo's oral-obesity business, projected to reach $10 billion by 2031, could not offset the pricing collapse after the arrival of generics. Growth decelerates to a 4% compound rate between 2027 and 2030. If the deceleration continues, it will justify 10x earnings as a fair price instead of a cheap one.

But Two Things Cut the Other Way

The 10.6x multiple already prices aggressive pessimism into a market leader of one of the fastest-growing drug classes in history. Morgan Stanley fueled the pessimism by discounting a 2031 cliff five years earlier. However, pharmaceutical patent expirations frequently face extensions and prove difficult to time. Second, the assumption that oral obesity treatments cannot offset patent losses relies on oral semaglutide being the bridge. But Novo's next-generation portfolio, including CagriSema and amycretin, offers a significant defense against the patent cliff. This remains unproven, however, specifically after CagriSema's earlier weight-loss data failed to impress, yet Morgan Stanley's terminal-value model discounts this pipeline almost entirely. The company is also expanding its franchise. On September 7, the STEP Young trial hit its endpoint in children aged six to twelve, strengthening the base its successors inherit.

Positioning: Contrarians Are Buying

The smart money is leaning in. As per the Insider Monkey database, 59 hedge funds held NVO in the second quarter of 2026, up from 55 in the first, indicating a slight increase in the modest institutional interest in the stock. Short interest on the ADR is negligible at about 0.7%. The positioning reflects a beaten-down value stock quietly seeing institutional accumulation while Wall Street turns increasingly bearish.

Bottom Line

Novo Nordisk A/S's (NYSE:NVO) growth is near its maturity, and the cliff is real. Discounting a 2031 terminal-value contraction into a 10x multiple in 2026 is an aggressive call on a low-visibility future. The stock is trading at 10x with a still-expanding franchise and contrarian accumulation after pricing in most of the bad news. Track clinical readouts for next-generation candidates like CagriSema and amycretin to confirm whether new therapies can replace semaglutide revenue before accumulating shares.

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