We recently compiled a list of the 10 Most Promising Future Stocks According to Analysts. In this article, we are going to take a look at where Novo Nordisk A/S (NYSE:NVO) stands against the other Most Promising Future Stocks According to Analysts.
Rising Market Volatility
Volatility in the equity markets is poised to hit levels not seen for the better part of the year as investors battle a string of developments. The uncertainty around the upcoming US elections and the soaring geopolitical tensions in the Middle East are the latest headwinds sending shockwaves in the market.
A report by MarketWatch indicates that October could turn out to be a spooky month for equities as valuations appear overstretched, with major indices at all-time highs. Analysts are no longer ruling out the prospects of a market crash given that recession fears are rising even though inflation levels have dropped significantly, prompting the Federal Reserve to cut interest rates.
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While expectation is high that the US economy will achieve a soft landing on higher interest rates, leading to lower inflation without causing a major hit to the economy, Michael Darda, chief economist and macro strategist at Roth Capital Partners, is sounding warning bells.
The economist maintains we are marching on ice that’s a bit thinner, depicted by rising unemployment and elevated earnings expectations that triggered market routes in August and September.
“It’s not unprecedented to have a slowdown period that looks like a soft landing, and then a recession ends up taking shape,” he said. “That’s sort of unexpected now because many have been lulled into this idea that the soft landing is going to be a permanent state of affairs for the business cycle. Equity market valuations reflected that coming into the summer.”
“But there’s been some cracks in the business cycle,” he cautioned, noting expectations for the economy, corporates, and the stock market have remained at “super high” levels.
A slowdown in the US economy amid the high interest rate environment comes amid a highly charged election that threatens to rattle the stock market. While indices are at all-time highs at the back of one of the longest bull runs, the prospects of a deep pullback are growing as investors become more cautious ahead of the election.
While the US stocks have often rallied following a major US election, Former Goldman Sachs partner Abby Joseph Cohen believes things could turn around this time around.
“Historically when you go back many cycles you see that the US stock market does pretty well after a major election. There is a sigh of relief and also most people feel that their candidate has won. This year aim not convinced it is going to be a sigh of relief rally. In fact if anything I am quite concerned about what happens if there is agitation of any sort following the election because of uncertainty about results,” Cohen said.
Although there is a good chance that the US stock market will crash this time, many analysts are also saying that things might improve following a very bad September that also saw premium stocks like the S&P 500 plummet and hit all-time lows.
AI-related firms continue to drive market gains, with the S&P 500 up 21% year-to-date. Howard Chan, CEO of Kurv Investment Management, highlighted the importance of monetizing AI initiatives, noting Meta’s share price surge due to strong sales growth.
Analysts are increasingly focusing on promising future stocks, particularly those in advanced technologies, which are expected to withstand short-term pressures and deliver long-term value. Investing in industry leaders with a competitive edge and a strong track record of revenue and earnings growth, combined with low interest rates, is seen as a strategy likely to yield significant returns. Despite market volatility, certain stocks continue to offer substantial opportunities and the potential to generate significant long term value.
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Our Methodology
To make our list of the most promising future stocks to buy according to analysts, we made a list of 40 stocks with market capitalization greater than $10 billion, significant average analyst share price percentage upside, and an average rating of Buy or better. They were then ranked in ascending order based on analyst’s upside potential, and the most promising future stocks are as follows.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Novo Nordisk A/S (NYSE:NVO)
Number of Hedge Fund Holders as of Q2: 67
Analyst Upside as of October 10, 2024: 33.93%
Novo Nordisk A/S (NYSE:NVO) is a healthcare company that has etched its name on developing and selling some of the most sought-after weight loss therapies. The company has already reaped tremendous rewards with the success of Ozempic amid solid demand for weight loss medicine.
Likewise, it is one of the most promising future stocks according to analysts, going by its significant investments towards enhancing manufacturing and pipeline. Novo Nordisk A/S (NYSE:NVO)’s competitive edge in the lucrative weight loss market segments is backed by its molecule semaglutide, which it sells under the trade names Ozempic, Segovia, and Rybelsus.
All three are indicated to treat obesity and also aid in eight losses. While the market for weight loss is projected to reach $130 billion by 2030, Novo Nordisk should be one of the beneficiaries, given the strong demand for its medications backed by a robust pipeline.
The company’s revenue has significantly increased over the past three years, with the introduction and sale of these drugs playing a major role. This growth has been particularly notable, with the trailing 12-month revenue jumping by 64% during this period, reaching a recent high of $35.5 billion.
While there are prospects of other new drugs coming into the market, Novo Nordisk A/S (NYSE:NVO) is already looking to safeguard its interest. The company already has three programs in phase 3 clinical trials: two in phase 2 and three in phase 1. One of the drugs in Phase 3, CagriSema, is already touted to have a market potential of about $80 billion
It’s also integrating AI to enhance drug discovery and development processes. The company plans to expand its AI capabilities and strengthen collaborations with international research institutions.
While Novo Nordisk A/S (NYSE:NVO) appears to be trading at a premium with a price-to-earnings multiple of 29, analysts on Wall Street maintain a strong buy with an average price target of $155.25, signaling a 33.93% upside potential. According to Insider Monkey’s data for Q2 2024, the number of hedge funds investing in Novo Nordisk A/S (NYSE:NVO) rose to 67, up from 60 in the previous quarter.
Overall NVO ranks 5th on our list of 10 Most Promising Future Stocks According to Analysts. While we acknowledge the potential of NVO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVO, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.