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Novo Nordisk (NVO) Stock Sinks As Market Gains: Here's Why

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In the latest trading session, Novo Nordisk (NVO - Free Report) closed at $126.16, marking a -1.93% move from the previous day. This change lagged the S&P 500's daily gain of 0.02%. On the other hand, the Dow registered a loss of 0.11%, and the technology-centric Nasdaq increased by 0.1%.

The drugmaker's stock has dropped by 0.6% in the past month, exceeding the Medical sector's loss of 4.52% and the S&P 500's loss of 3.01%.

Investors will be eagerly watching for the performance of Novo Nordisk in its upcoming earnings disclosure. The company's earnings report is set to be unveiled on May 2, 2024. It is anticipated that the company will report an EPS of $0.77, marking a 20.31% rise compared to the same quarter of the previous year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $9.23 billion, up 19.93% from the year-ago period.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $3.32 per share and revenue of $41.59 billion, indicating changes of +22.96% and +23.36%, respectively, compared to the previous year.

Investors should also note any recent changes to analyst estimates for Novo Nordisk. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 1.14% downward. Currently, Novo Nordisk is carrying a Zacks Rank of #3 (Hold).

With respect to valuation, Novo Nordisk is currently being traded at a Forward P/E ratio of 38.79. This valuation marks a premium compared to its industry's average Forward P/E of 14.05.

One should further note that NVO currently holds a PEG ratio of 2.15. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. By the end of yesterday's trading, the Large Cap Pharmaceuticals industry had an average PEG ratio of 1.67.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This industry, currently bearing a Zacks Industry Rank of 224, finds itself in the bottom 12% echelons of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.


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