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Novo Nordisk (NVO) Gains As Market Dips: What You Should Know

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In the latest trading session, Novo Nordisk (NVO - Free Report) closed at $155.32, marking a +0.4% move from the previous day. The stock outpaced the S&P 500's daily loss of 0.16%. At the same time, the Dow lost 0.12%, and the tech-heavy Nasdaq lost 3.64%.

Heading into today, shares of the drugmaker had gained 7.91% over the past month, outpacing the Medical sector's gain of 0.9% and the S&P 500's gain of 0.07% in that time.

Novo Nordisk will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.05, up 11.7% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.7 billion, up 5.71% from the year-ago period.

NVO's full-year Zacks Consensus Estimates are calling for earnings of $4.49 per share and revenue of $29.9 billion. These results would represent year-over-year changes of +29.77% and +19.5%, respectively.

It is also important to note the recent changes to analyst estimates for Novo Nordisk. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 2.57% higher within the past month. Novo Nordisk is currently a Zacks Rank #1 (Strong Buy).

Digging into valuation, Novo Nordisk currently has a Forward P/E ratio of 34.45. For comparison, its industry has an average Forward P/E of 14.1, which means Novo Nordisk is trading at a premium to the group.

Investors should also note that NVO has a PEG ratio of 1.61 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Large Cap Pharmaceuticals was holding an average PEG ratio of 1.75 at yesterday's closing price.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 95, which puts it in the top 38% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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