This international pharma company beat estimates by two cents last quarter. Traders are piling into the shares, with recent calls outnumbering puts by a bullish 68-to-1 ratio.
Novo Nordisk (NVO)
From Global Investing
Jeremy Grantham, Chief Investment Manager at Grantham, Mayo Van Otterloo, recently noted that the only country for decades that has consistently outperformed the US is Denmark, which he attributed to one single stock. This stock rose by a third in 2015, but with that track record Novo Nordisk (NVO) can easily chalk up another growth win in 2016.
NVO is drug firm more like a specialist than a general practitioner, thanks to nearly a century of treating a growing global healthcare need: diabetes. It specializes in insulin R&D, and as we all get richer, more sedentary, and older, diabetes is a growing scourge, most of all in developing countries like China, India, and Mexico. One reason may be that their populations are descended from people whose genes were better at turning food into flab, gaining survival benefits in famine times.
NVO’s R&D spillover finds include GLP-1 for weight control, hormones, and hemophilia drugs. But just as a specialist can charge more money than a GP, Novo can charge more for its main new drug line, weight-control drug Saxenda. Novo’s injectable anti-obesity drug is harder to take than a pill and costs about $1075 per prescription, at the high end of diet drugs. Yet because of its diabetes franchise, and because Saxenda is a higher dose of the same drug as Victoza (liraglutide) to treat diabetes, it has a natural market among diabetics with weight problems. The drug—not currently covered by US insurers—has already grossed over $2.6 million in prescriptions. Novo already had doctors and patients in place 32 weeks ago when it launched Saxenda.
Novo-Nordisk is relatively under-owned by institutions—under 8%—and it is cheap about paying dividends, yielding 1.3% now, at about $58.
Vivian Lewis, Global Investing, www.global-investing.com, 212-758-9480, December 17, 2015