In this article, we discuss 5 high free cash flow stocks to buy in 2022. If you want to read about some more high free cash flow stocks to buy in 2022, go directly to 10 High Free Cash Flow Stocks to Buy in 2022.
5. Novo Nordisk A/S (NYSE:NVO)
Number of Hedge Fund Holders: 31
Free Cash Flow TTM: $60 Billion
Novo Nordisk A/S (NYSE:NVO) is a Denmark-based healthcare firm. On July 11, the company announced that it had achieved positive results in two studies related to drug candidates for the treatment of haemophilia. One was a Phase 3 study on concizumab and the other a trial for Factor Villa. The company said it was planning to launch regulatory filings for the former in the US and Japan as early as the second half of 2022. In Europe, the required paperwork would be submitted by 2023.
On July 15, Morgan Stanley analyst Mark Purcell upgraded Novo Nordisk A/S (NYSE:NVO) stock to Overweight from Equal Weight and raised the price target to DKK 915 from DKK 805, forecasting that the firm had a $11 billion sales opportunity with a weight management drug.
At the end of the first quarter of 2022, 31 hedge funds in the database of Insider Monkey held stakes worth $4.49 billion in Novo Nordisk A/S (NYSE:NVO), up from 28 in the previous quarter worth $4.43 billion.
In its Q1 2022 investor letter, Baron Funds highlighted a few stocks and Novo Nordisk A/S (NYSE:NVO) was one of them. Here is what the fund said:
“We initiated a position in Novo Nordisk A/S (NYSE:NVO), a leading global biopharmaceutical company headquartered in Denmark that specializes in treatments for diabetes, obesity, and other chronic diseases. Novo Nordisk and Eli Lilly, another holding in the Fund, are leaders in the GLP-1 (glucagon-like peptide 1 agonists) class of diabetes treatments, a $15 billion market that is growing rapidly but still has just 3% penetration of diabetes prescriptions globally. Diabetes drugs in the GLP-1 class include Trulicity (Eli Lilly), Ozempic (Novo Nordisk), and Rybelsus (Novo Nordisk). These drugs stimulate insulin secretion and inhibit glucagon secretion, which helps lower blood sugar levels. GLP-1s also slow stomach emptying and increase how full you feel after eating, which reduces appetite and can lead to weight loss. We believe Novo Nordisk’s diabetes franchise will continue to generate solid growth driven by Ozempic and Rybelsus. We are particularly excited about the growth prospects for Novo Nordisk’s anti-obesity franchise, which is just getting started with the launch of Wegovy. In a 68-week clinical study of adults living with obesity or excess weight with a medical problem, adults taking Wegovy lost on average 35 pounds or roughly 15% body weight. There are over 650 million people living with obesity globally and only 2% are treated with an anti-obesity medication. Even with more conservative assumptions about the addressable patient population, we think Novo Nordisk’s obesity franchise can exceed $10 billion in sales over time. Novo Nordisk launched Wegovy in June 2021 but faced supply constraints due to overwhelming demand and manufacturing constraints at a contract manufacturer. Management has indicated supply issues will ease in the second half of 2022. Novo Nordisk’s pipeline includes new diabetes and anti-obesity medications that improve upon its existing portfolio. We think Novo Nordisk A/S (NYSE:NVO) can generate double-digit revenue and earnings growth for many years.”
