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Why You Should Add Novo Nordisk Stock to Your Portfolio

Headquartered in Bagsvaerd, Denmark, Novo NordiskNVO is healthcare company and a with leadership in the global diabetes market. It looks like a great stock to buy now. Here are some reasons for the same.

Favorable Rank and Solid VGM Score: Novo Nordisk holds a Zacks Rank #2 (Buy) and a favorable VGM score of 'A'. Back-tested results show that only stocks with a VGM Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Rising Estimates and Share Price Movement: Earnings estimates for Novo Nordisk moved up 0.9% and 0.8% for 2017 and 2018, respectively, over the past 30 days. Also, the company's earnings performance has been pretty impressive, as it has delivered positive surprises in three of the trailing four quarters. In fact, the average earnings beat over the last four quarters is 3.15%.

Although the company's share price declined last year, the same rose so far this year. Shares of Novo Nordisk have rallied 21.9% this year so far while the Zacks classified Large-Cap Pharma industry gained 13.2%.

Novo Nordisk has a strong presence in the Diabetes care market with a global value market share of 27%. Top line is being consistently driven by strong sales within diabetes and obesity care with the main growth coming from Victoza, Tresiba, NovoRapid and Saxenda.

Strong Foothold in the Diabetes Market:

Victoza, a once-daily human GLP-1 analogue is expected to continue to be a significant contributor to the company's top line. Earlier this week, the company announced that the Endocrinologic and Metabolic Drugs Advisory Committee (EMDAC) of the FDA voted 17-2 in favor of Victoza that the drug provides substantial evidence of cardiovascular risk reduction in patients with type II diabetes. The positive panel recommendation brings Novo Nordisk a step closer to get the cardiovascular indication included on the label of Victoza. Though the FDA is not bound by the Advisory Committee's decision , it usually does follow it. The addition of positive cardiovascular outcomes data on the label of the diabetes drug can give sales a boost.

New Products and Others Nearing Approval: The company has recently received approvals for many new drugs.

The company's once-daily single-injection combination of Tresiba and Victoza - IdegLira which is already marketed in Europe has received FDA approval and will be launched in the U.S. soon.

Rebinyn (Coagulation Factor IX (Recombinant), GlycoPEGylated) for the treatment of adults and children with hemophilia B was approved in the U.S. and granted marketing authorization in Europe this year.

These drugs should contribute to the company's revenues going ahead.

Also included are Fiasp (fast-acting insulin aspart) which is already marketed in the EU and a regulatory filing has been made in the U.S. Regulatory applications have been filed in the U.S. ,EU and Japan for another candidate semaglutide (diabetes).

Novo Nordisk also has a strong pipeline, primarily focusing on therapeutic proteins within insulin, GLP-1, blood clotting factors and human growth hormone. We are encouraged by the company's efforts to develop new treatments for diabetes, which is its core area of expertise.

Conclusion

Novo Nordisk faces its share of challenges such as generic competition for some key drugsThe diabetes market is highly crowded given the presence of companies like Eli Lilly and Company LLY which has a strong portfolio of diabetes treatments including Trulicity (GLP-1), Jardiance . Some other companies include Merck & Co., Inc. MRK consisting of products like Januvia and Janumet and Sanofi's SNY Lantus.

However, Novo Nordisk's top line should be driven by its diabetes drugs -Victoza and Tresiba. Further , the addition of positive cardiovascular outcomes data on the label of the Victoza can give sales a boost.

Novo Nordisk A/S Price and Consensus

Novo Nordisk A/S Price and Consensus | Novo Nordisk A/S Quote

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Sanofi (SNY): Free Stock Analysis Report

Eli Lilly and Company (LLY): Free Stock Analysis Report

Novo Nordisk A/S (NVO): Free Stock Analysis Report

Merck & Company, Inc. (MRK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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