Looking at the recent posts about Novo Nordisk's 0.56 P/S and 10x Forward P/E, the consensus seems to be that the market is "pricing in the death of the company." However, value usually only gets this cheap if there's a structural belief that earnings will permanently decline. What do you guys think? Yes I have some investments in NVO 🙁
Is Novo Nordisk the new "Intel"? (When high ROE meets a falling knife)
byu/capitalquotient_pf ininvesting
Posted by capitalquotient_pf
2 Comments
The price action is so bad for NVO, every little pump comes with more selling. I suspect the real valuation of NVO should be in the 20s. Cut your loss and buy from the 20s
It’s mostly because it’s a high risk environment right now.
Lily has a better formula but is behind NOVO in both market acceptance, repeat customer base, and physician prescription rates. Novo will also bring their oral version to market much earlier, although again it’s a worse overall product. Lily has a much deeper patent moat on their product as well. Major countries like India have Novo to lose their patent protection on their core formulas Q3 of 26 and will force massive price reduction to compete in generic/gray market.
NOVOs entire model honestly all comes down to the oral GLPs. If early adoption and results are reasonable they can own the oral market for a few years before Lily gets there in 29/30. Lily again has a much better product but will be a few years late to the game. If NOVO can lead price once Lily releases their oral they can still do well but it all comes down to how important that last few percent of efficacy comes to physicians.