Why Novo Nordisk Should Be Considered For The “Magnificent Seven”

Why Novo Nordisk Should Be Considered For The “Magnificent Seven”

The “Magnificent Seven” are helping to lift the main American indices to record levels. This highly regarded group of stocks — among the most heavily weighted stocks on the market S&P500 — is made of Alphabet, Amazon, Apple, Metaplatforms, Microsoft, NvidiaAnd You’re here. There are good reasons to invest in these seven companies, and that’s why they have performed so well in recent years.

However, some companies outside of this clique are just as impressive and deserve to be considered on par with the Magnificent Seven. One of these companies is Novo Nordisk (NYSE:NVO), a pharmaceutical giant based in Denmark. Here’s why this drugmaker deserved to be included in what would be called the Magnificent Eight.

Why Novo Nordisk Should Be Considered For The “Magnificent Seven”

A long-time leader in diabetes care

Novo Nordisk has been around for several decades. Throughout its history, the company has been a leader in a key therapeutic area: diabetes care.

Through the development of various new insulin products and other medications for diabetics, Novo Nordisk has helped contain this serious global health crisis. The company’s ability to maintain a lead in this market, despite strong competition from various other players, is impressive.

As of November 2023, Novo Nordisk has a 33.8% share of the global diabetes market, up almost 2% year-over-year. The company continues to innovate in this area as well. Last year, it submitted regulatory applications for icodec, a potential once-weekly insulin product, in the United States, Europe and China.

Here’s why it’s important: Diabetic patients who need insulin usually take it daily. A once-a-week option is more convenient and eligible patients will be happy to make the change.

Icodec is expected to get approval this year if all goes according to plan. Novo Nordisk’s dominance in diabetes care has generally generated strong financial results.

NVO Revenue Chart (Quarterly)NVO Revenue Chart (Quarterly)

The company’s stock performance has also been strong, with returns over the past decade much better than the broader market. The Magnificent Seven are so named in part because of their ability to generate outsized returns, which is clearly a point in Novo Nordisk’s favor.

Expect more of the same

Novo Nordisk is making noise in another related therapeutic area: the treatment of obesity. The company’s weight-loss drug, Wegovy, became so popular that demand outstripped supply. The company faces a shortage problem as the market for anti-obesity drugs is expected to boom through the end of the decade.

THE pharmaceutical giant has a lot of competition, particularly from its long-time rival in the diabetes market, Elie Lilly. And Amgen, PfizerAnd Viking Therapeutics are among drugmakers looking to launch their own weight-loss drugs.

Investors shouldn’t worry, however. As Novo Nordisk has already demonstrated, it can stand up to the competition. The company’s Wegovy is expected to remain one of the best-selling obesity treatments for some time.

He is also working on new targets. Novo Nordisk recently reported very encouraging phase 1 results for a potential oral diabetes drug called amycretin.

The company has created a culture focused on innovation, particularly within its core areas of expertise. This is one of the main reasons why leaders in certain therapeutic areas typically remain at the top of their fields.

Novo Nordisk is also looking to diversify its range. Its product portfolio includes medicines for rare diseases, cardiovascular diseases, neurological disorders, etc.

Novo Nordisk checks all the same boxes as the existing Magnificent Seven. These companies are all innovative leaders in their respective industries and have demonstrated strong financial and stock performance for some time – and will likely continue to do so. The shoe fits – and that’s why Novo Nordisk has earned its place here.

It doesn’t matter if someone creates a new Magnificent Eight that includes Novo Nordisk. Investors should consider adding the company’s stock to their portfolio.

Should you invest $1,000 in Novo Nordisk right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Thrive Junior Bakina holds positions on Amazon and meta-platforms. The Motley Fool holds positions and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Pfizer and Tesla. The Motley Fool recommends Amgen and Novo Nordisk and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Novo Nordisk isn’t one of the ‘Magnificent Seven,’ but here’s why I think it should be was originally published by The Motley Fool

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