LRT Capital Management, in its Q1 2021 investor letter, mentioned Novo Nordisk A/S (NYSE: NVO), and shared their insights on the company. Novo Nordisk A/S is a Bagsværd, Denmark-based pharmaceutical company that currently has a $181.2 billion market capitalization. Since the beginning of the year, NVO delivered a 12.84% return, extending its 12-month gains to 21.34%. As of May 27, 2021, the stock closed at $78.82 per share.
Here is what LRT Capital Management has to say about Novo Nordisk A/S in its Q1 2021 investor letter:
“Novo Nordisk is the global leader in insulin, which is, sadly, a growing business as more and more people around the world suffer from diabetes. Millions of people need daily injections of insulin to stay alive, a number that, unfortunately, is likely to continue to grow by millions more in the coming decade. It may seem at first glance that insulin should be a commoditized business, after all, it was discovered and synthesized over a hundred years ago, but nothing could be further from the truth. There are many types of insulin and Novo Nordisk has spent billions on R&D over the years to develop new products. On February 11th, the company reported favorable results from a phase-3 trial of Semaglutide, a drug that is currently used for Type 2 diabetes treatment. The study evaluated the use of Semaglutide for weight loss treatment in non-diabetic patients and found a significant impact on weight loss for patients receiving Semaglutide vs. the placebo control group. If Semaglutide is approved for weight loss treatment, we expect it will be meaningfully accretive to the company’s bottom line.
Furthermore, Novo Nordisk reported Q4 2020 earnings on February 3rd, with flat revenues YoY and EPS growth of +8%. The company’s proprietary product line supports returns on invested capital of over 40%, and while sales growth is relatively slow (+6% annualized CAGR over the past decade), the company’s shares trade at a reasonable valuation of only 21x forward earnings. For a company with an extremely predictable business, high returns on capital, and a forecastable future, we believe this to be highly attractive. Shares are down 1.75% year-to-date.”
Our calculations show that Novo Nordisk A/S (NYSE: NVO) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, Novo Nordisk A/S was in 23 hedge fund portfolios. NVO delivered an 8.96% return in the past 3 months.
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