Articles by Prosper Junior Bakiny

Health

Why Is Everyone Talking About Novo Nordisk Stock?

Novo Nordisk (NVO 2.27%) is grabbing plenty of headlines of late, and has been a hot topic among pharmaceutical investors for the past few years. Unfortunately for the Denmark-based drugmaker, many of the company-specific developments that have generated attention have weighed on its stock price. Novo Nordisk's shares are down by 47% this year alone. What exactly is going on with the pharmaceutical giant? And is it worth buying its shares at current levels? Let's find out. Novo Nordisk cuts its guidance, again Novo Nordisk has been a leader and pioneer in the GLP-1 market. However, the company is now losing ground to its biggest competitor, Eli Lilly. As of August, Novo Nordisk's share of the GLP-1 space was 49.3%, down from 55.7% in the same period last year. Its top line through September -- most of which it makes thanks to its GLP-1 medicine -- grew by 12% year over year to 229.9 billion Danish kroner ($35.6 billion). That's pretty good for a pharmaceutical giant, but Eli Lilly's GLP-1 portfolio is growing much faster than that pace. Furthermore, Novo Nordisk lowered sales growth guidance for its fiscal 2025. It now expects the top line to increase by between 8% and 11%, down from its most recent projection of 8% to 14%. The drugmaker cited lower growth expectations for its GLP-1 medicines, including Wegovy and Ozempic, as the reason for the guidance change. This isn't the first time it's done so; in fact, it has almost become a habit for Novo Nordisk over the past few quarters. The market despises uncertainty. So it's not surprising that Novo Nordisk's shares are moving in the wrong direction, even if we ignore other factors impacting the company. Looking at other developments Will the stock remain southbound for the foreseeable future? There are some reasons to think so. One of them is that Novo Nordisk recently struck a deal with the White House to offer Wegovy and Ozempic at reduced prices for some patients, including those covered by Medicare and Medicaid, provided they meet certain requirements. Given that its GLP-1 portfolio is already struggling, selling these drugs at a discount is probably not what Novo Nordisk had in mind. The company is looking to turn things around, though, and it has made several moves to that end. One of them turned into one of the biggest acquisition battles witnessed in the pharmaceutical industry for some time. Novo Nordisk made a bid to acquire the mid-cap biotech Metsera (MTSR 0.35%), after the latter company had already agreed to be acquired by Pfizer. Here's what was at stake: Metsera's highly promising mid-stage anti-obesity candidate, MET-097i. The medicine delivered strong phase 2 results, and could carve out a niche in the growing weight-management market. Pfizer fought back with lawsuits and a higher bid, and was eventually able to pry Metsera away from Novo Nordisk. Still, this episode showed how much Novo Nordisk wants to improve its pipeline. Is Novo Nordisk stock a buy? Amid all the noise, there are positive signs for Novo Nordisk, too. Wegovy has earned some important label expansions over the past year that should help push sales in the right direction. One of the most important is in treating metabolic dysfunction-associated steatohepatitis (MASH), a disease that is linked to obesity and affects millions of patients in the U.S. alone. Wegovy became only the second medicine -- and the first in the GLP-1 category -- to earn U.S. approval in MASH. There is significant potential there. An oral version of Wegovy could also earn the green light in weight management. That would significantly expand Novo Nordisk's reach, as oral pills are easier and cheaper to manufacture at scale. Additionally, even the deal with the White House isn't all bad, as it also came with a three-year tariff exemption. Lastly, Novo Nordisk has important medicines in the pipeline. CagriSema has proved effective (albeit not quite as much as Novo Nordisk wanted) in weight management in phase 3 studies, and recently showed the ability to reduce blood pressure in other clinical trials. The company's amycretin posted strong phase 2 results in weight management, and is now in late-stage trials of both oral and subcutaneous formulations. And Novo Nordisk has already expanded its pipeline through acquisition. Even without the Metsera deal, the company's portfolio of investigational drugs in its core therapeutic area looks deep. Finally, the stock now looks reasonably valued, especially given significant clinical and commercial catalysts on the horizon. Novo Nordisk is trading at 14 times forward earnings, versus the 17.3 average for healthcare stocks. Don't wait until Novo Nordisk recovers to buy shares; now might be the best time.

Business

Can CVS Health Maintain Its Growth Through the End of 2025?

After struggling for a few years, CVS Health (CVS +0.43%) is finally rebounding. Its shares have soared this year by 77%, largely due to improved financial results. That said, the pharmacy giant still has a lot to do as it tries to fix parts of its business that still aren't performing as well as it would like. If CVS can make progress along those lines, it could maintain its recent momentum through the end of the year and perhaps carry it into 2026. Should investors consider investing in CVS Health as the year draws to a close? The rebound continues CVS Health struggled amid mounting expenses, especially in its Medicare Advantage business. The increased activity in that segment did help push revenue higher, just not enough to cover the rapidly rising costs. This led to shrinking margins and earnings. To make matters worse, CVS repeatedly lowered its guidance as it struggled to forecast rising medical costs that weighed on its bottom line. It needed to cut expenses and focus on more profitable growth. The good news is that the company is already making some headway along those lines. Last year, CVS announced a plan to initiate at least $2 billion in cost savings over several years, which would include closing down some stores and reducing its workforce. These efforts might already be paying off, as financial results have looked stronger this year. In the third quarter, revenue beat expectations: It came in at a company record of $102.9 billion, an increase of 7.8% compared to the third quarter of 2024. CVS did report a $5.7 billion non-cash goodwill impairment charge related to changes within its healthcare delivery unit, which harmed its GAAP (generally accepted accounting principles) operating and net income. So looking at adjusted metrics is a much better indicator of where the business is going. Adjusted operating income was $3.5 billion, up 35.8% year over year, with an operating margin of 3.4%, up from last year's 2.7%. And non-GAAP earnings per share came in at $1.60, up almost 47% year over year. Third-quarter earnings were strong, and CVS Health even increased its guidance for the fiscal year 2025. Can the momentum continue? What does the future hold? There are several reasons to think CVS could continue performing well over the next year. First, the company will continue making adjustments to improve profitability. It plans to scale back its Medicare Advantage business, which has been the source of many of its woes in recent years. CVS also said it would exit the Affordable Care Act's health insurance market, another unit that was harming the bottom line. These changes might lead to lower revenue overall, but stronger top- and bottom-line growth in the near to medium term. Second, despite a solid run this year, CVS Health's shares still look attractively valued. The stock trades at 10.7 times forward earnings, while the healthcare industry average is 17.1. While the company's challenges in recent years justify the lower valuation, its rapid turnaround makes the stock attractive at current levels, especially given that it's still getting started. That means CVS could carry its momentum through the end of the year and into the next. But what about beyond? My view is that the stock is also an attractive long-term bet. The company's vast network of pharmacies and deep relationships with patients that have been shopping there for years -- sometimes decades -- grant it a strong competitive advantage. On top of that, CVS offers a variety of health-related services, thereby keeping patients within its ecosystem, whether through its insurance operations, prescription drug business, or primary care services. And with major long-term tailwinds like the world's aging population, which will lead to increased spending on healthcare services, CVS should benefit over the long run. Lastly, the stock is also a strong option for dividend seekers, given its attractive forward yield of 3.4% and reasonable cash payout ratio of 53.3%. So, even if it fails to perform well in the next year, CVS Health looks like an excellent pick for long-term income seekers.