Traders’ pleasure about synthetic intelligence (AI) has helped increase many tech shares. Nevertheless, yow will discover huge winners outdoors of tech, too. This stock-split inventory is thrashing each Apple and Microsoft — with no AI tailwind in any respect.
Who wants AI whenever you’ve obtained Ozempic and Wegovy?
Typically, inventory splits function key catalysts for shares. That wasn’t the case for Novo Nordisk (NVO -1.40%), although.
The massive pharma inventory jumped greater than 40% yr so far earlier than Novo Nordisk’s two-for-one inventory cut up performed on Sept. 20, 2023. Novo’s shares declined a bit after the cut up earlier than bouncing again.
Apple and Microsoft have been simply outperforming Novo Nordisk all through a lot of 2023. Issues modified, nevertheless, after Novo Nordisk introduced constructive outcomes on Aug. 8 for semaglutide in lowering the chance of main cardiovascular occasions in chubby or overweight adults.
Two days later, Novo Nordisk reported its monetary outcomes for the primary half of the yr. Semaglutide was the large star.
The drug is marketed as Ozempic as a remedy for sort 2 diabetes and as Wegovy in treating weight reduction. Ozempic’s gross sales soared 58% yr over yr within the first half of 2023, whereas Wegovy’s gross sales skyrocketed 367%.
Even brighter days forward for Novo Nordisk
It is probably that even brighter days lie forward for Novo Nordisk. The corporate raised its full-year 2023 gross sales progress forecast by 5%, because of higher expectations for Ozempic and Wegovy.
Novo Nordisk’s outlook might get even higher. Earlier this month, the large drugmaker introduced that it was stopping a kidney outcomes trial of semaglutide.
Halting a medical research would not at all times imply excellent news, however it did this time. An interim evaluation discovered that semaglutide was so efficient in slowing the development of renal impairment in sufferers with sort 2 diabetes and persistent kidney illness that the trial did not must proceed.
The success of Ozempic and Wegovy has given Novo Nordisk loads of money to fund the enlargement of its pipeline. During the last couple of months, the corporate has introduced the acquisition of Inversago Pharma and the acquisition of experimental hypertension drug ocedurenone from KBP Biosciences.
Though AI hasn’t offered a tailwind for Novo Nordisk, it might play a extra essential position for the corporate sooner or later. In September, Novo introduced that it might collaborate with Valo Well being to make use of AI in drug discovery. The massive drugmaker additionally licensed three preclinical drug discovery packages concentrating on cardiovascular illnesses that Valo developed utilizing its AI-powered Opal Computational Platform.
Is Novo Nordisk inventory a purchase now?
Wall Avenue analysts suppose that Novo Nordisk inventory can go even increased. The consensus 12-month value goal displays an upside potential of greater than 20%. Nevertheless, I do not suppose Novo Nordisk inventory is the most effective decide for traders proper now.
For one factor, the inventory’s valuation is excessive. Shares presently commerce at a ahead earnings a number of of over 34.7x. Clearly, lots of progress is already baked into the worth of this pharma inventory. I additionally count on that Eli Lilly‘s Mounjaro will vault previous Ozempic and Wegovy if it wins U.S. approval as a weight-loss remedy.
Whereas Novo Nordisk inventory is thrashing Apple and Microsoft in 2023, its efficiency lagged properly behind each tech shares during the last 10 years. I believe that historical past will repeat itself. For my part, AI is probably going to supply a extra sturdy long-term tailwind than Ozempic and Wegovy will.
Keith Speights has positions in Apple and Microsoft. The Motley Idiot has positions in and recommends Apple and Microsoft. The Motley Idiot recommends Novo Nordisk. The Motley Idiot has a disclosure coverage.
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