IBD 50 Growth Stock: Diabetes Breakthrough Lifts Novo Nordisk

Novo Nordisk (NVO) is building a flat base with a possible buy point at 144.88. The stock is positioned to grow from the recent FDA approval for a breakthrough oral drug for type 2 diabetes. NVO has joined the elite IBD 50 growth stock list. But a recent story on CBS’s “60 Minutes” has the FDA looking into a possible violation.


The “60 Minutes” episode on CBS ran a 13-minute story on Jan. 1 on Novo Nordisk’s weight loss drug Wegovy. But a non-profit physician group, Physicians Committee, is saying that it was really an advertisement. The 17000 strong doctors association stated that the story lacked ‘fair balance’ and did not adequately address adverse effects of the drug or alternative treatments available.

This $326 billion Denmark-based pharmaceutical giant develops and markets therapies for diabetes, obesity, hormone replacement and growth disorders.  It has also partnered with Lumen Bioscience for oral medicines to treat cardiometabolic disease.

It is on the fast track after the FDA approved Rybelsus, a revolutionary oral drug for type 2 diabetes, taking the lead from Pfizer (PFE) and Eli Lilly (LLY). This compound stimulates the hormone that regulates liver activity while improving insulin levels in the body.

Novo also plans to increase production of  Wegovy, which has been in short supply in the U.S. According to reports, sales grew 300% in 2022 despite empty shelves.

NVO stock has impressive 94 Composite and Relative Strength Ratings. Steady sales growth over the past eight quarters highlights the stock’s fundamental strength. Earnings have also grown over this period, except for a miss in one quarter, supporting the 83 Earnings Per Share Rating.

Strong Sales And Earnings Growth

Fourth-quarter sales of $6.9 million marked 18% year-over-year growth, while earnings rose 19% to 87 cents per share. FactSet analysts expect Q1 2023 sales to increase 11% year over year to $6.9 million, with earnings up 16% to$1.08 per share.

On Feb. 1, Novo rallied on news it will repurchase $798 million worth of shares between February and May of this year.

The growth stock holds the top spot in the Medical-Ethical Drugs subsector, which ranks 92nd among IBD’s 197 industry groups, according to IBD MarketSmith.

Growth Stock Enters NASH Competition

Last September, Novo bought Ventus Therapeutics for $70 million, taking charge of the lab’s anti-inflammatory research for chronic kidney disease and other cardiometabolic disorders.

Earlier, it acquired IFM Therapeutics for $1.5 billion, accessing its portfolio of drugs for metabolic, autoimmune and neurological diseases. IFM also researches treatments for fatty liver diseases, for which there is no FDA-approved treatment yet.

More funds have been buying NOVO stock over the past seven quarters. Growing fund ownership is a sign of strength, according to the CAN SLIM trading methodology.

Exchange traded funds own Novo Nordisk as well. The VanEck Pharmaceutical ETF (PPH) and the PGIM Jennison Focused Growth ETF (PJFG) hold shares.

Please follow VRamakrishnan on Twitter for more news on growth stocks.


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