Novo-Nordisk (NVO)

Removed from his portfolio not long ago on a stop loss. Long term, secular growth of anti-obesity drugs is still strong. Short-term, cyclical challenges. Quite leveraged to anti-obesity and diabetes, but LLY is more diversified.

Once negative sentiment dissipates, could see him getting back in. About 20-25% earnings growth, trading at 22x, so PEG is just under 1. Value is there, but sentiment not in its favour right now.

It reports Wednesday. Eli Lilly has already announced soft Q4 sales, but expects a good 2025, so how is NVO doing? Maybe buy some shares before the report.

There is a lot going on with the class of drug involving diabetes and weight loss. The potential of PLP1 drugs is huge and could become a $100 billion market so there is lots of competition.The efficacy of the new class is superior and they are very excited over some positive results. He doesn't own NVO but loves the space and instead of adding to NVO as the caller was wondering about, he would buy Eli Lilly as a complement to it in that space. Their new drug is much the same as Ozempic but is in an oral form rather than injection. This could be a game changer with 60 different ongoing trials. Eli Lilly is the first to get it approved for obesity and phase three results will be coming out of Japan. Diversity is essential.

Challenging 6 months. Price action is one thing, but if you drill down and look at the business, everything is going quite well. Recent manufacturer acquisition solidifies supply and shipping. US patent concerns, but to open that would open a Pandora's box on all patents, including domestic ones.

Very bright future. Opportunity to add.

Exited NVO based on stop losses. Market had high expectations, and efficacy numbers came in weaker than anticipated, sold off. A great name, but he's out for the moment. LLY is outperforming NVO at this point. NVO is a bit more leveraged to the weight-loss-management drugs, whereas LLY is more diversified.

LLY has strong technical indicators, with 200-week and 200-day MAs moving higher. Still shows strength within his quant screens. Trading at 35x forward PE, with 28-29% growth rate -- pretty impressive; PEG ratio rather low. Dropped below 200-day MA, but that might be temporary. Both names have beta, but likes them long term.

Fallen about 50% from its top. Usually trades ~20x PE; 2026 earnings expected at roughly 16x. Oversold. Opportunity for at least a recovery of 30%. Dollar-cost averaging does work. Last week, the news was 22% weight loss compared to the 25% expected. Operating margins of 40% plus, making money hand over fist with both insulin and weight loss products. Profits were up 43%, and so did the dividend last year.

When things get too out of hand, the selloff begins as people take profits and lock them in. Then one piece of bad news comes out, and the stock gets trampled. But this is a high-quality stock generating a ton of free cashflow. New clients are getting a full position, while current clients are being bumped up to a full 3% position.

(Price target is for NOVO.B on CPH in Danish krone.) Yield is 1.6%.

Has owned this for 9 years, but he's cut it 7 times. Periodically, drug companies hit patent cliffs, which triggers sell-offs. Going forward, LLY will win the obesity drug fight, but this market won't go away and NVO will remain #2. Still a buy.

They carry one mega-drug, so other competitors are already putting out their own weight-loss drug. He prefers Merck for its lower PE and better pipeline--not better, but safer.

Fallen lately, great time to buy. Projected revenue of about $46B next year. Demand has always been there, it's the supply that's been challenged. Yield is 1%.

Changing how people think about dieting. So important because obesity causes a lot of other chronic issues. NVO and LLY are way ahead of everyone else. Own either one and do well over the next several years.

Ran too far, too fast. Has come down more in line with expectations. Pattern:  spends $$ on R&D, creates a blockbuster drug, stock runs up, comes back down to consolidate. He'd add around $100.

Ozempic is their major product and it has been on a wild ride. He is not a buyer of a company where the share price is inflated over one drug. Pipelines cannot be evaluated.

Bump in road on sales. Still 1.1x PEG. 27x forward PE, 25% growth rate. Pretty cheap for a growth name. Still a leader in obesity treatment and diabetes. Wegovy patent expiration not until 2032. Long-term technical trends remain intact.

Does not own shares in the company. Recent hiccups with production. Lots of competition in the markets. Very hard to differentiate. Would not recommend buying right now. 

Bit of concern over sales from Wegovy. Long-term aspects of this name speak to global demographic trends. Aging population, rising obesity rates. These same drugs are used to treat other conditions as well. Still sees 30% growth rate in the weight-loss-treatment industry, and 25% earnings growth rate from NVO. He'd add here.

He holds LLY as well, so he's doing OK ;)

He trimmed his position because drug companies can have a competitor make a patent announcement that takes 20% off their stock. He would buy a half position for new clients on a recent pullback.