Along with the rest of the market, Novo Nordisk (NYSE:NVO) has been sinking this year – with losses approaching 30% year-to-date. The skid for the Danish biopharma company started awhile back, and the company’s share price has lost over half its value since reaching a peak last summer.
The appetite for the company’s injectable GLP-1 obesity drug, Wegovy, helped drive up Novo Nordisk’s share price to record heights over the preceeding few years. However, competitor Eli Lilly has been chipping away at Novo Nordisk’s market share, and recently unveiled data reflecting progress towards developing an oral medication that could serve as an alternative to Novo Nordisk’s shots.
Has the time come for investors to abandon Novo Nordisk? Not according to top investor Jonathan Weber. In fact, Weber believes that the famous Warren Buffett saying – “be greedy when others are fearful” – is the right approach.
“Following a 50% drop from recent highs, NVO trades at a significant discount compared to historical valuations, presenting a buying opportunity,” states the 5-star investor, who is among the top 2% of TipRanks’ stock pros.
Weber points out that Novo Nordisk is much more than its obesity drugs, and remains a market leader in diabetes care. The investor notes that the global diabetic population is expected to rise by an astonishing 46% over the next few decades.
In that vein, the obesity market is also expanding, and is projected to reach $170 billion by the early part of the next decade. In other words, there will likely be plenty of demand for Novo’s products going forward.
“Even if NVO’s market share declines considerably over time, that would still mean a major market opportunity,” adds Weber.
With a sales multiple of less than 5x, NVO is currently trading at roughly half of its historic valuation. The time to make a Warren Buffett move is at hand, according to the investor.
“Using the recent share price slump to buy into this attractive company at a good price should work out well,” sums up Weber, who rates NVO a Buy. (To watch Weber’s track record, click here)
In contrast, Wall Street is not quite as bullish as Weber. With 2 Buy, 5 Hold, and 1 Sell ratings, NVO holds a consensus Hold (i.e. Neutral) rating. That being said, there is clearly some optimism in the air, as NVO’s 12-month average price target of $83.80 has an upside of ~37% in the year ahead. (See NVO stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.