IBD 50 stock Novo Nordisk has formed a four-weeks-tight pattern with a buy point at 108.98. The health care leader is set to announce its fourth-quarter and full-year earnings on Wednesday. Novo Nordisk stock is today's selection for IBD 50 Growth Stocks To Watch.
Besides the new pattern, the stock is also in a buy zone from a flat base with an entry at 105.69, according to IBD MarketSmith.
Sales growth has been accelerating in the past five quarters, from 8% to 18%, 24%, 37% and 39%. Earnings growth also has accelerated, from 2% to 19%, 39%, 54% and 69% the past several quarters.
Shares gained 53% in 2023, beating the S&P 500's 24% gain for the year. In January, Novo Nordisk stock is up nearly 4.5%, compared with the S&P 500's 2.5% gain.
The company makes two popular weight-loss drugs: Wegovy and Ozempic. Earlier this month, it entered into two separate agreements with Omega Therapeutics and Cellarity. The news resulted in a breakout for Novo Nordisk stock.
Through the deal with Omega, Novo Nordisk will explore ways of improving metabolic activity and help with weight loss. Through Cellarity, the company will explore treatments for metabolic dysfunction-associated steatohepatitis, or MASH. According to the company, patients with MASH are at higher risk for type 2 diabetes and heart disease.
Omega and Cellarity will receive $532 million each upfront for research with future payments after they reach certain milestones and royalties.
Novo Nordisk Ratings Show Market Leadership
Novo Nordisk stock has strong IBD ratings. The Composite Rating is a perfect 99 while the EPS Rating is nearly ideal at 97. The stock also leads the medical ethical drugs group.
The Relative Strength Rating of 89 is a point of concern, however, and has fallen from 97 just three months ago.
Though mutual funds own just 2% of the ADR, more funds have been buying the stock over the past seven quarters. Increasing fund ownership in recent weeks has given the stock an Accumulation/Distribution Rating of B. Allspring Growth Fund (SGRAX) and the MFS Growth Fund (MFEGX) hold shares of Novo Nordisk.
Among exchange traded funds, the VanEck Pharmaceutical ETF and the Invesco International Dividend Achievers ETF hold shares of Novo Nordisk stock.
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