3 Reasons I Bought Novo Nordisk Stock Instead of Eli Lilly

They are leaders in the GLP-1 weight loss space, and have been generating strong growth in recent years

But while they are similar, the stock I invested in earlier this year was Novo Nordisk

Here's why I bought it instead of its larger rival, and why I still think Novo is the better buy right now

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It has a simpler, focused primarily on diabetes and obesity What stands out to me Novo Nordisk is how laser-focused it is on two crucial areas of healthcare: Diabetes and obesity

It does have some revenue coming in from rare diseases, but the company's main focus is on these two areas

It has two fantastic ducts that are already dering strong results in those segments: Ozempic (diabetes) and Wegovy (weight loss)

The company is working on more weight loss treatments, including a pill

But by simply ramping up duction of its highly GLP-1 injections, it can still generate a lot more growth down the road

While Eli Lilly is more diversified, with oncology and immunology also being key areas of its, I think the biggest payoff can come from focusing on diabetes and weight loss drugs

Its lower valuation gives it more room to go on a run I am a bargain hunter, and with s of Novo Nordisk crashing over the past several months, I couldn't resist the opportunity to buy the healthcare stock at what seemed a valuation that's too good to pass up

But that isn't the case with Novo

Even if Eli Lilly does have better-performing weight loss drugs, I don't think they are sufficiently better that they make the stock and its 63 times earnings multiple a better overall investment option

Eli Lilly can still rise in value from where it is, but I think there's far more room for Novo Nordisk to rise higher in both the short term and the long term, given its more modest price tag

Investors appear to be underestimating Novo Nordisk Eli Lilly has been stealing the spotlight over the past year, with its ducts showing better results in clinical trials

It also didn't help that in March, Novo released stage 2 trial data for one of its more mising obesity drugs, CagriSema, which fell short of expectations

There's been a string of bad news for Novo Nordisk, which has been weighing the stock down, but there are still other drugs in the company's pipeline

With two already highly successful treatments in Wegovy and Ozempic that are apved, the company is by no means in bad shape

I also don't agree with the market that it's all sheer weight loss

A drug needs to be well tolerated, otherwise patients may stop using it, regardless of how effective it is for losing weight or managing blood sugar levels

Ozempic was first apved in the U

Having first-mover advantages in this sense can help Novo Nordisk, as that can make its drugs default options for people who may want to try a GLP-1 treatment, but who are also concerned the side effects

Investors appear to be underestimating the stock today

But as Novo Nordisk continues to post strong results and keeps on more treatments, the excitement around this once-mising could return

That could set the stage for a big rally

Both stocks are good buys, but Novo may duce better returns from here on out Buying a stock that's crashing in value can seem a bad idea, but it's important to consider why it's happening

If the is in trouble and its fundamentals are broken, then it can certainly be a bad idea to take a chance on a struggling

But that isn't the case with Novo Nordisk

It's still growing, it still has some terrific assets, and it's more into GLP-1 drug development

This is a situation where I believe the market has overreacted and has been both too bullish on Eli Lilly and too bearish on Novo Nordisk

When that happens, it can be an opportune time to invest in an underperforming stock Novo Nordisk

David Jagielski has positions in Novo Nordisk

The Motley Fool recommends Novo Nordisk

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