1. Novo Nordisk A/S (NYSE:NVO)
Upside Potential: 44.04%
5-Year Net Income CAGR: 19.59%
TTM Net Income: $13.32 Billion
Novo Nordisk A/S (NYSE:NVO) is a Danish healthcare company engaged in diabetes care. The company mainly specializes in diabetes care and other chronic diseases. Novo Nordisk’s main focus remains on insulin products for diabetes treatment. However, the company is also focused on growing its market share and enhancing its product offering, especially in the treatment of diabetes and obesity.
Novo Nordisk A/S (NYSE:NVO) is successfully managing the supply and demand following the introduction of its weight-loss drug, Wegovy, into foreign markets. The company continues to improve its share in the diabetes industry as it has already surpassed its target of obtaining one-third of the market by 2025. Currently, NVO holds a 33.9% market share in the global diabetes industry.
In the first nine months of 2024, the company has achieved 24% sales growth and 22% operating profit growth from a year ago. The company’s sales are mainly driven by the rise in demand for its GLP-1-based diabetic and obesity medicines. The GLP-1 treatments cover 3x more patients compared to three years ago and have over 43 million patients being treated from the medication.
Artisan Partners stated the following regarding Novo Nordisk A/S (NYSE:NVO) in its “Artisan Global Equity Fund” Q1 2024 investor letter:
“In addition, shares of Novo Nordisk A/S (NYSE:NVO) rose after it reported phase 1 clinical trial results for its new experimental obesity drug Amycretin, a single molecule that operates as a GLP-1 receptor agonist, reducing one’s appetite. The new oral treatment achieved a 13.1% average weight loss after 12 weeks, more than doubling the efficacy of Wegovy for the same period. This result also bested Lilly’s Orfoglipron, another experimental drug that achieved 5%–6% average weight loss earlier in its trials. While the Amycretin data are preliminary, investors were encouraged by the prospects of Novo Nordisk solidifying a best-in-class obesity designation, a desirable status given rising competition. In our view, Novo Nordisk has the best obesity/Type 2 diabetes pipeline in the industry, which should help protect this franchise from competition over the next 10 years.”
While we acknowledge the potential of Novo Nordisk A/S (NYSE:NVO) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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