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Strategic trade
Trade view / 24 August 2016 at 11:54 GMT

#SaxoStrats: Novo Nordisk looks to win in China

Head of Equity Strategy / Saxo Bank
Denmark
Price target:
Market price:
strats
 
Background

As mentioned in our morning call Novo Nordisk shares are down 15% since the disappointing Q2 earnings report that contained a cut to forecasts. However, beneath all the data points the China story is growing stronger every quarter. In Q2 it was even more gratifying to see Novo Nordisk gaining market share in China and beating its peers by a wide margin. We believe China and other markets will offset temporary weakness in North America driven by pricing pressures and that investors will buy into the declines acknowledging that Novo Nordisk is still one of the most interesting growth stories in Europe.

In addition, the company has a very robust business model and very high return on capital. The free cash flow yield given high sales growth and robust operating income is very attractive. We are implementing our long Novo Nordisk with a stop loss at 302 and take profit limit at 350.

Novo Nordisk weekly share price the past five years:
Novo
 

Parameters

Buy: Novo Nordisk B share, NOVOb:xcse

Stop: DKK302

Target: DKK350

Time horizon: strategic

Non-independent investment research disclaimer applies. Read more
24 August
SierraPt. SierraPt.
Peter, many thanks for the idea! Can you please share status of your model portfolio, I.e. Which positions you still recommend holding. Thanks!

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