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 might 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, principally as a result of Rob Vinall was invested again then (he offered since).
Initially I checked out them in August 2016 after which once more a couple 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 previous posts must be divided by 2).
In the long run, I did nothing, though my second put up principally 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 authorized Ozempic and with this the “age of weightloss medication” started. My greatest mistake in hindsight was clearly, to not observe the inventory additional.
I did look briefly at Novo Nordisk throughout my “All Danish shares” collection in 2022, however once more, I didn’t perceive the importance of the load loss medication.
The final time I encountered the corporate was in 2024 after I listened to glorious Acquired podcast (3 1/2 hours) on Novo Nordisk which I can extremely suggest. At the moment, the growth was in full swing.
Trying 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 most important mistake was clearly to not observe up on the corporate however forgetting about it from 2016 to 2022.
Trying on the general numbers proper now, Novo appears 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 % they usually purchased again +1-2% of excellent share p.a. up to now years.
Though they considerably lowered expectations a couple of days in the past, the expansion price fo 2025 remains to be significantly better than many of the different European corporations:
If we might simply take the midpoint of the working revenue progress 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 stage 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 at the moment:
- Trump (Tariffs, strain on drug costs)
- Competitors (ElyLilly, “Compunding”
On the plus facet, it appears that evidently GLP-1 medication appear to have so many optimistic attributes (plus some negatives) that there’s a potential alternative for extra areas of software and naturally a worldwide roll out.
I additionally wish 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.
Trying on the share worth of the final 5 years, we will clearly see that Eli Lilly has held up significantly better than Novo:
With a P/E of 29x (NTM), Eli Lilly can be way more costly.
However, many giant Pharmaceutical corporations are very low cost in the mean time, 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 will see, Eli Lilly is clearly an outlier. Pharma is absolutely low cost.
What to do now ?
Novo Nordisk is clearly a top quality firm with an extended historical past. They clearly face important challenges proper now (competitors, Trump), however up to now, these conditions had been alternatives to purchase the inventory.
As well as, their most important product already has a profound influence on the lives of many individuals, particularly with regard to their consumption behaviour. There appears to be a powerful indication that individuals utilizing GLP-1 medication devour 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.
However, particularly in recent times, 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 develop into even more durable now.
Nonetheless, I do consider that the inventory on the present valuation deserves some consideration.
As a way to inspire 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 nonetheless needed to supply a soundtrack. Who could be becoming higher to Novo Nordisk than Fats Boy Slim ?
Fatboy Slim – Reward You [Official Video]
