The stock did have a pretty nice run in the last year, but it’s slid in the past few months (~20% since it’s High in June) for no clear reason (I understand it should have dropped short term based on the below, but this seems a little more than I would have expected). Their capacity was stretched, so they acquired manufacturers and also are working to expand their own internal capacity. Compared to LLY it seems like this company is more focused and leaner, which to me seems like a plus. They lowered forecasts, but I didn’t see this as warranting the drop it ended up seeing.
People aren’t going to just stop needing their medication, also from what I understand right now they have one of the most competitive oral pills for weight loss in the pipeline right now and working to offer their medication in China which has one of the largest obese populations in the world.
Lastly it’s PE/Forward PE aren’t too high versus the average of the industry. LLY on the other hand has a PE over 100 right now and a forward PE in the 30 range. I don’t particularly buy this, both LLY and NVO have research in the pipeline, but don’t see how LLY can lower their PE by that much in the next year or so.
I only bring up LLY in all of this because it seems like it’s been hit less than NVO. Both drugs are pretty overpriced (can stem from a lack of regulation of PBMs) so for all this senate hearing noise, I don’t see why it effects one more than the other besides the fact that LLY is a US company and NVO is not.
What’s everyone else’s take on this? Is there something I’m missing here?
Edit: in regard to capital structure, LLY also has a greater reliance on debt than NVO. Dont necessarily think this is a bad thing, but worth noting NVO isn’t growing/expanding through added debt.
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