Disclaimer: THIS IS NOT INVESTMENT ADVISE. PLEASE DO YOUR OWN RESEARCH.
9 years, three encounters
One of many nice facets of writing an internet weblog for a very long time is that I can look again and discover one thing I’ve written a very long time in the past which I’d have in any other case lengthy forgotten.
In Novo Nordisk’s case I’ve regarded on the firm virtually precisely 9 years in the past, largely as a result of Rob Vinall was invested again then (he bought since).
Initially I checked out them in August 2016 after which once more a number of months later when the share worth had declined even additional (There was a inventory cut up of two:1 in 2023, so the per share numbers in my outdated posts must be divided by 2).
In the long run, I did nothing, though my second submit mainly marked the low level within the inventory worth virtually to the precise day.
What I clearly didn’t have on my radar again then was that in December 2017, the FDA permitted Ozempic and with this the “age of weightloss medication” started. My greatest mistake in hindsight was clearly, to not comply with the inventory additional.
I did look briefly at Novo Nordisk throughout my “All Danish shares” sequence in 2022, however once more, I didn’t perceive the importance of the burden loss medication.
The final time I encountered the corporate was in 2024 once I listened to glorious Acquired podcast (3 1/2 hours) on Novo Nordisk which I can extremely advocate. At the moment, the increase was in full swing.
Wanting again, from my posts in 2016, the inventory grew to become (virtually) a ten bagger inside the subsequent 8 years earlier than the current drop began. My important mistake was clearly to not comply with up on the corporate however forgetting about it from 2016 to 2022.
Wanting on the general numbers proper now, Novo appears to be like fairly low cost:
This time, we see a P/E a number of of 12,4 in comparison with 18,8 again then (and 35 instances in 2022).The present dividend yield stands at 4,3 % and so they purchased again +1-2% of excellent share p.a. up to now years.
Though they considerably lowered expectations a number of days in the past, the expansion charge fo 2025 continues to be significantly better than many of the different European corporations:
If we might simply take the midpoint of the working revenue development at +13%, we’re virtually at an “anticipated return” of shut to twenty%.
Additionally from TIKR, two fascinating graphs:
The EBIT margin has elevated considerably over the previous twenty years:
Whereas Return on Capital appears to have peaked already in 2016 and is heading downwards since then, however nonetheless at very wholesome ranges:
Each, trailing P/E and ahead P/E are on the lowest degree in TIKR historical past:
One fascinating coincidence is that again then in 2016, they introduced a brand new CEO which now’s going to get replaced by a brand new one in an “Accellerated succession”.
Dangers & Alternatives:
Simply studying the overall press, the primary points for Novo Nordisk are presently:
- Trump (Tariffs, stress on drug costs)
- Competitors (ElyLilly, “Compunding”
On the plus aspect, it appears that evidently GLP-1 medication appear to have so many constructive attributes (plus some negatives) that there’s a potential alternative for extra areas of utility and naturally a worldwide roll out.
I additionally need to point out a remark {that a} “trusted commentator” made on my weblog:
So it appears that evidently in the mean time, Eli Lilly appears to have overtaken Novo of their core product.
Wanting on the share worth of the final 5 years, we are able to clearly see that Eli Lilly has held up significantly better than Novo:
With a P/E of 29x (NTM), Eli Lilly can also be rather more costly.
Alternatively, many giant Pharmaceutical corporations are very low cost in the mean time, most probably pushed by the uncertainties within the US which for all gamers is clearly the biggest revenue pool by a large margin.
This here’s a peer group comparability from TIKR:
As we are able to see, Eli Lilly is clearly an outlier. Pharma is de facto low cost.
What to do now ?
Novo Nordisk is clearly a top quality firm with a protracted historical past. They clearly face vital challenges proper now (competitors, Trump), however up to now, these conditions have been alternatives to purchase the inventory.
As well as, their important product already has a profound impression on the lives of many individuals, particularly with regard to their consumption behaviour. There appears to be a robust indication that individuals utilizing GLP-1 medication eat considerably decrease quantities of packaged meals, alcohol and cigarettes. So watching the additional growth is smart for a major a part of the inventory market universe.
Alternatively, particularly lately, a inventory which is falling will fall for a really very long time. Catching falling knives has by no means been simple, however subjectively it has turn out to be even tougher now.
However, I do consider that the inventory on the present valuation deserves some consideration.
With a view to encourage myself to maintain wanting, I purchased a 0,5% place at present costs (~42 EUR per share).
Appendix:
Though that is clearly not a inventory pitch, I however needed to offer a soundtrack. Who could be becoming higher to Novo Nordisk than Fats Boy Slim ?
Fatboy Slim – Reward You [Official Video]
