Novo-Nordisk: Diabetes and Dollars

09/23/2014 8:00 am EST


Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

Our latest featured breakout stock is a Denmark-based healthcare firm; with annual revenues of $84 billion, the firm produces medical products, especially those that treat diabetes, explains Leo Fasciocco, editor of Ticker Tape Digest.

The company's diabetes care segment covers insulins, and GLP-1. It also involves protein-related products, which include glucagon, protein-related delivery systems and needles, obesity, and oral antidiabetic drugs.

The biopharmaceuticals segment covers the therapy areas of hemophilia care, growth hormone therapy, and hormone replacement therapy.

The stock has made almost a fivefold move since the bear market bottom in 2008. Novo-Nordisk A/S (NVO) had a 5-for-1 split in late 2013.

NVO's 12-month performance shows the stock appreciating 44% versus a 19% gain for the S&P 500 index (SPX). That is a good performance for such a large-cap play.

The stock has been trending higher and is poised to make a new all-time high. The accumulation and distribution line broke out before the price did. That shows excellent underlying buying taking place during the basing work.

NVO is a big-cap play showing just modest earnings growth. This year, analysts are forecasting a 5% increase in net to $1.79 a share from $1.71 a year ago.

Going out to 2015, the Street projects a 13% gain in net to $2.03 a share from the anticipated $1.79 this year.

Institutional sponsorship is excellent. The largest fund holder is 4-star rated Harbor Capital Appreciation Fund, which was a recent buyer of 118,675 shares. Also, the 5-star rated Jackson Square Large Capital Growth Fund was a recent buyer of 178,500 shares.

The stock is a breakout play most suitable for conservative investors. We are targeting the stock for a move to $56. A protective stop can be placed near $45.

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