Novo-Nordisk (NVO)

It reported yesterday and shares plunged nearly 15% and another 6% today. The quarter was fine, but the guidance brutal: 5-13% sales hit this year due to intense competition in weight-loss drugs (Eli LillY).

Used to own. Sold in 2024 when it broke the uptrend. Trended downward until the fall, then has had 6 months to establish a decent base. Broke the downtrend, went above $50, acting as though it's under renewed accumulation. May not go screaming back up the way it did in 2023-24, but looking pretty good technically.

LLY is breaking out to new highs. Bit more diversified than NVO, and a bit more stable. LLY is supposed to come out with pill form for weight loss sometime this year. Well above 200-day MA, which is starting to push higher. Prefers LLY.

NVO is more focused on 2 areas:  diabetes and weight loss. Recently announced pill version for weight loss, and that's very positive. Valuation's quite cheap. Competitive pricing, regulatory scrutiny. Trades at 17x PE, but earnings growth forecast looks cloudy for next couple of years. Might be building a base, but still a tad below 200-day MA.

Both have signed agreement with US government for expansion in Medicare, albeit with lower pricing.

Weight-loss space is currently a battle between NVO and LLY, though other competitors will arrive on the scene in the next 5-10 years. LLY secured way more capacity than NVO did. LLY executed better, and revenue and sales should grow much faster. He owns LLY.

Huge drop makes it more interesting, but LLY still has the better growth outlook (including the pill version when it hits the market later this year).

(Note the shorter timeframe.)  Has the lead in the pill version of weight loss drug, and really needs to make sure that people are using their pill (before LLY gets there). 

Lead in diabetes and insulin drugs, but recently face strong competition from Eli Lilly, which has cratered their own stock. LLY trades at 50x PE vs. NVO 14x. NVO is being unfairly punished due to competitive threats. They replaced the CEO and board. Obesity effects 1 million worldwide, but only 5% use weight-loss Drugs. NVO and LLY will continue their duopoloy and grow.

The first thing he sees in the chart is a downtrend. Biotech is lagging the benchmarks. If it breaks $42, the downtrend will continue. Look for a higher low before stepping in.

Trump is trying to get the prices down in pharmaceuticals. The market is growing in double digits. He has owned this stock for a long time and trimmed several times.  The only real incentive in the stock was a recent alzheimer drug.  He sold it for another company which has been a winner. However if it gets much cheaper he would buy.

Down today on the Alzheimer's news (their drug doesn't work well); but the street always felt this drug was a lottery ticket. Pays a 3.4% dividend yield. Ozempic is a good brand name; prices will be lower in the US next year, so volume will increase. Can buy it now. 

There always seems to be some 'problem' occurring with the company, and it is behind peers in several areas. The stock is cheap, but it has been a value trap for some time. EPS growth is expected to very low in the next two years and it has cut guidance four times this year. We think we would wait until the New Year on this one. We imagine it sees more selling, or at best a drift down, for a while yet.
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There always seems to be some 'problem' occurring with the company, and it is behind peers in several areas. The stock is cheap, but it has been a value trap for some time. EPS growth is expected to very low in the next two years and it has cut guidance four times this year. We think we would wait until the New Year on this one. We imagine it sees more selling, or at best a drift down, for a while yet.
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Down about 55% from peak. Challenges and headwinds for all of pharma right now. Be wary. Tariffs, FDA, pricing issues (cut prices to access US Medicare and Medicaid), competition (from LLY, but also as patents expire). CEO let go. Missed filing Canadian patent protection documents. Head of FDA doesn't like vaccines.

Now trades at level that's half decent, but wouldn't buy more right now. Weight-loss business still has room to grow, but the question is how much percentage-wise will NVO participate? Pricing power will determine how the stock price is going to go. Still a decent company. 

Not enough tailwinds to step in. If you own and have patience, can hold. Dead money for now.

Give the new CEO time to settle in. Shares have been slipping. Sell at the mid-50s. Eli Lilly is best in this space.

Another one ripe for tax-loss selling. In a downtrend of lower highs and lower lows. Until that ends, don't buy. Chart gives slight indication that it could be the beginning of a base. He'd want to see more up-and-down consolidation and then a breakout. But that's a ways off.

Previously owned both, but sold out of NVO because it's more concentrated in the diabetes and weight loss space. Weight loss has come out of favour somewhat due to competition and generics. NVO's 200-day MA is falling, with stock price falling below that. Earnings growth only 6%. Long term will come back into favour, as it's a big market.

LLY is more diversified, has larger scale. Chart's technical structure is better, though performance has been flat/negative over last 12 months. Price is above 200-day MA. 15% earnings growth.