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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: OlafB who wrote (78339)	10/26/2025 12:04:31 PM
From: E_K_S	Respond to of 78419

Re: Novo Nordisk A/S ADR (NVO) - Explain the Value Proposition & position in the portfolio basket NVO, BMY & OGN are 3 recent adds I have made this month in my Drug/Pharma Basket. My current portfolio weighting in this sector is 5.52% made up of 8 stocks: JnJ 1.76%; MRK 1.46%; ABBV 1.05%; BMY 0.42%; GILD 0.3%; OGN 0.24%; NVO 0.21%; & EXEL 0.08%. Could the portfolio weighting grow into a 10% portfolio position? I think w/ the proper weighting of the stocks listing above, it could achieve that in 2-4 years. The goal is to expand my exposure to the Pharma/Drug group and let the NVO position grow into a 1%-2% portfolio position. As an example, I started my JNJ position 1/2025 at an avg cost of $150 now a 44.93% CAGR hitting my 35% CAGR goal well before my 2 year target date; MRK most of my Buys were in 6/2009 and this has grown to my 2ng largest Pharma/Drug behind JnJ but has only generated a 9.68% CAGR including dividends over the 16 years I have owned it. NVO shows a lot of the characteristics of an undervalued Drug/Pharma play at 13.6x PE vs 29.3x reversion to the 5 year mean; PEG <1.0 and a projected 5 year CAGR >12%. I plan to increase my % weighting to at least 0.50% and maybe 0.75% and see if this can grow into a 1.5% portfolio position in 18-24 months. Below is the Perplexity AI Analysis: Value Proposition Novo Nordisk is one of the world’s premier metabolic disease companies, commanding dominant market shares in diabetes and obesity care. Its established semaglutide franchise—Ozempic (for diabetes) and Wegovy (for obesity)—provides unparalleled earnings visibility. The firm’s five-year total shareholder return of 76% and current fair value estimates near $120 per ADR suggest approximately 56–60% undervaluation after recent corrections. A structural moat rooted in R&D scale, manufacturing control, and global distribution across 170+ countries supports sustained double-digit profitability.? Future Growth Engines Next-Generation GLP-1 Drugs: Expansion beyond semaglutide, including CagriSema (GLP-1/GIP combo) with superior weight-loss efficacy, could reinforce Novo’s duopoly position alongside Eli?Lilly’s tirzepatide programs.? Metabolic & Cardiovascular Extensions: Semaglutide’s cardiovascular and cognitive indications (REDEFINE4 and EVOKE trials) may unlock new multibillion-dollar markets.? Asian Market Expansion: Rapid penetration into Asian obesity markets offers sustained mid-teens revenue growth potential.? R&D Reinforcement Post-Restructuring: Novo is redirecting DKK?8?billion from job cuts (˜?9,000 positions) into obesity and diabetes R&D, manufacturing upgrades, and clinical scaling.? Mean Reversion Potential The current P/E ˜13.6 vs 5-year mean˜ 29.3 implies material re-rating upside if macro and GLP-1 demand stabilize. Combined with a PEG <1.0 and projected 5-year CAGR > 12%, Novo represents a high-quality mean-reversion candidate within the healthcare sector. Analysts from multiple houses (HSBC, TD Cowen, Bernstein) have recently flipped bullish, citing “overdone pessimism”.? Assessment: Novo Nordisk ADR (NVO) appears fundamentally undervalued and strategically positioned for multi-year recovery. Assuming stable regulatory conditions and GLP-1 market expansion, this period could mark a favorable reversion-to-mean entry, with valuation multiples likely to normalize toward historical levels as restructuring benefits materialize.