Novo Nordisk (NVO - Free Report) is a global healthcare company and a leader in the worldwide diabetes market. Also, the company is a key player in hemophilia care, growth hormone therapy, hormone replacement therapy and obesity.
However, let’s find out if Novo Nordisk will be a good investment in 2018. Here are five reasons to invest in the stock this year.
Good Rank and Solid VGM Score: Novo Nordisk has a Zacks Rank #2 (Buy) and a favorable VGM Score of ‘B’. 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 stocks here.
Shares Trend Up in 2017: After a rather difficult 2016, the stock gathered steam in 2017.
Shares of Novo Nordisk have gained 50.8% in 2017 while the industry registered an increase of 15.2%.
Strong Foothold in the Diabetes Market: Novo Nordisk has a strong presence in the diabetes care market with a global value market share of 27%. Also, this Denmark-basedstock has a solid foothold in the total insulin market, and the modern and new-generation insulin market with a global value market share of 47% and 45%, respectively. Notably, the company has one of the broadest diabetes portfolios in the industry.
Diabetes Drugs Doing Well: Novo Nordisk’s top line is driven by strong performance of products such as Victoza (liraglutide). Victoza is a once-daily human GLP-1 analogue approved for adult type II diabetes. Currently, it is the market leader in the GLP-1 segment with a 51% share. Going forward, we expect Victoza to continue being a significant contributor to the company’s top line.
In August 2017, the FDA approved a label expansion for Victoza. The drug is now approved to reduce the risk of major adverse cardiovascular (CV) events in adults with type II diabetes and established CV disease.
In September, the FDA approved Fiasp for the treatment of adults with diabetes. The company had resubmitted the new drug application (NDA) for Fiasp (fast-acting insulin aspart) as a class II re-submission to the FDA in March 2017.
Focus on Pipeline Development: Novo Nordisk has a strong pipeline primarily focusing on therapeutic proteins within insulin, GLP-1, blood clotting factors and human growth hormone. In fact, we are encouraged by the company’s efforts to develop new treatments for diabetes, which is its core area of expertise.
Novo Nordisk’s key pipeline candidates include semaglutide and nonacog beta pegol. In December 2017, the FDA approved its semaglutide once-daily pre-filled pen to improve glycaemic control in type II diabetes patients. The GLP-1 receptor agonist will be marketed by the trade name of Ozempic, which is under review by several regulatory agencies comprising the European Medicines Agency, the Japanese Pharmaceuticals and Medical Devices Agency.
However, we believe the new drug approvals and a solid pipeline will pave way for growth this year for the company.
Novo Nordisk A/S Price
Zacks Rank & Key Picks
Some other top-ranked stocks in the same space include Sucampo Pharmaceuticals , GlaxoSmithKline plc (GSK - Free Report) and Corcept Therapeutics Incorporated (CORT - Free Report) . All the stocks carry a Zacks Rank #2.
Sucampo’s earnings per share estimates have moved up from 1 cent to $1.12 for 2017 and from $1.07 to $1.19 for 2018, over the last 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 15.63%. The share price of the company has increased 28.6% in 2017.
GlaxoSmithKline’s earnings per share estimates have moved up from $2.89 to $2.90 for 2017 and $2.81 to $2.82 for 2018 over the last 60 days. The company pulled off a positive earnings surprise in three of the trailing four quarters, with an average beat of 6.69%.
Corcept’s earnings per share estimates have moved up from 77 cents to 88 cents for 2018 over the last 60 days. The company pulled off a positive earnings surprise in two of the trailing four quarters, with an average beat of 14.32%. The share price of the company has increased 146.4% in 2017.
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