Key Takeaways
- With a 41% weighting in the index, Novo Nordisk’s decline drives Danish market losses, highlighting concentration risk.
- The Morningstar Denmark Index is now undervalued, trading at a 20% discount.
- US-Denmark tensions add geopolitical risk, affecting companies like Orsted.
With the Morningstar Denmark Index as the worst-performing Morningstar index this year, across both developed and emerging markets, Danish stocks may now appear to offer compelling value for long-term investors. The Danish index is down 20.7% so far in 2025 in Danish krone and 38.4% in the past 12 months.
Morningstar New Zealand Index, the second worst performing developed market index, is down 0.2% in the same period. When looking at emerging markets, Morningstar Thailand Index has lost 3.7% followed by Morningstar Malaysia Index, reporting a 1.8% loss. All returns data is in base currency.
“The previously high-flying Danish economy has had its wings clipped as historical growth figures have been revised lower and industrial production has declined, particularly in the pharmaceutical sector,” says Jan Størup Nielsen, chief analyst at Nordea.
Are Danish Stocks Now Undervalued?
The Morningstar Denmark Index is currently trading at a price/fair value ratio of 0.8, indicating the overall market is valued at a 20% discount to its estimated fair value.
Among the Danish companies covered by a Morningstar analyst, Coloplast COLO B, GN Store Nord GN and Genmab GMAB are all 5-star stocks, meaning they are trading at the largest discount to their estimated fair value. Notably, five out of the nine most undervalued stocks are in the healthcare sector, reflecting broad-based weakness, and potential market mispricing, across the sector.
While Genmab has held up relatively well, the rest of the healthcare stocks have posted double-digit losses over the past 12 months. The most significant drop has come from Novo Nordisk NOVO B, Denmark’s largest company, which has lost nearly 60% of its market value in that time and now trades at a 19% discount to its fair value estimation.
Novo Nordisk Weighs on Danish Equity Market
With a 41% weighting in the Morningstar Denmark Index, Novo Nordisk’s dramatic share price decline has been a major drag on the domestic equity market. It also underscores the risks of a stock market being heavily concentrated in just a few dominant companies.
The pharmaceutical giant, behind weight-loss drugs Ozempic and Wegovy, has faced intense pressure in 2025. Most recently, the company announced plans to cut 9,000 jobs globally, including 5,000 in Denmark. This decision follows downward revisions to its sales and profit growth targets amid growing competition in the weight-loss drug sector. While the restructuring move was received positively by markets, with Novo’s shares trading higher following the announcement, the broader investor sentiment remains cautious, with its stock trading 39% lower in 2025, and 58% lower over a one-year period.
But it’s not just pharmaceuticals under pressure. Denmark’s green energy industry, another major part of the country’s equity market, has also faced significant setbacks. Companies such as Orsted ORSTED and Vestas VWS were valued at high multiples for several years, driven by ambitious forecasts for wind power expansion. However, falling energy prices, increased competition from nuclear energy, and a shift in political tone around the green transition in the US have all contributed to a sharp sector slowdown.
Orsted exemplifies the sector’s challenges, with shares taking a beating following an EUR 8.1 billion rights issue. Shortly after the announced rights issue, the US Bureau of Ocean Energy Management issued a stop-work order for the Revolution Wind project, which is 50% owned by Orsted. As a result, the company’s shares are down 41% year-to-date and 56% over the past 12 months. Morningstar analyst Tancrede Fulop cut his fair value estimate by 40% to DKK 170 after the “huge discount rights issue”. The shares are currently trading at a 37% discount.
Could Trump Target Danish Stocks to Take Over Greenland?
While there’s no confirmed evidence that US President Donald Trump is directly targeting Danish stocks, recent political tensions between Washington and Copenhagen have added a layer of geopolitical risk to Denmark’s already pressured equity market.
In early 2025, Trump reignited his desire to acquire Greenland, citing its strategic location, untapped natural resources, and growing importance in Arctic defense. The move has been firmly rejected by Danish and Greenlandic officials, who have reiterated that Greenland is not for sale and reaffirmed the territory’s autonomy.
The dispute escalated further when the stop-work order on Orsted’s Revolution Wind project was announced. While the official reasoning cited regulatory concerns, the timing of the decision—shortly after Trump renewed public interest in Greenland—has raised speculation about a political undertone.
“The stop-work order that the Trump administration issued against Orsted’s Revolution Wind project off the coast of Connecticut may be related to the spat between the US and Denmark over Greenland,” says Tancrede Fulop, senior equity analyst at Morningstar.
Why Novo Nordisk is Affected by US Politics
Even in the absence of specific targeting of Danish stocks, the US impact on Danish stocks cannot be ignored. Novo Nordisk relies on the US pharmaceutical market for roughly 57% of its sales, so any shift in regulatory tone or healthcare policy under Trump’s administration could have material consequences for its business, and in turn, its share price.
The main US policy angles that could affect Novo are closely linked to scrutiny over drug pricing, says Karen Andersen, director of equity research at Morningstar.
Drug prices for semaglutide, the active ingredient in Ozempic and Wegovy, are currently being negotiated lower by US health insurance program Medicare, in changes to take effect in 2027. Currently the drug is covered under health insurance policies for diabetes but not usually for obesity.
She also highlights the political debate around most favored nation pricing, where US drug prices could be pegged to lower international benchmarks, a move that would hit high-margin obesity drugs.
However, Andersen believes such pricing rules are unlikely to move forward due to limited executive branch powers in the US. Morningstar’s valuation for Novo Nordisk already includes a 50% net price cut for semaglutide for Medicare patients beginning in 2027, but no adjustment for most favored nation pricing.
