Long in NVO Established
There are several aspects to this chart- the wave analysis is certainly up for debate, but what remains is improving fundamentals.
On this chart we have a corrective sequence ABC starting in 2014 and concluding in early 2017. On this chart, we can see the 30 day MA volume skyrockets in the beginning of 2017. This corresponds to the timing of the Obama administration focusing their healthcare attacks on big pharma, specifically drug pricing. We can even see a faint busted head and shoulders on this chart, with the right shoulder being broken by terrible guidance on earnings
At the peak in 2015, we also see a peak in operating profit margin. Over the next 12 month fundamentals began to draw back with book value/share, liquidity ratios, and margins all slowly declining. As Obamacare got pushed through US congress (where over 50% of revenue is earned), the outlook looked bleak. Then the Man who lives above the Guchi Store was elected, and big pharma saw hope on the horizon and began surging higher. This was a false bull market though; margins and liquidity ratios were not improving for NVO.
Then the surprise happened, President Trump began attacking pharma. Combined with the already volatile stock market NVO plunged to a correction right at the .618 fibonnaci level, if it maintains this as the low a perfect sign that the 2 impulse wave has just completed.
Where we stand now:
Novo Nordisk, one of the largest pill pushers was forced to lower outlooks with increasing competition from generics. With this pressure, the company has been forced to cut many US jobs and refocus R&D spending, rendering some patents and research useless. Over the last few years they've been forced to impair assets for use on their income statement, but NVO still maintains a 2.29 P/Tangible Book ratio, (better than peers: GSK, BMY, LLY). Gross margins have begun improving and P/S has landed at one of the lowest, if not the lowest level in the peer group. Improvement on the liquidity measures could send this stock flying, but most importantly is the deadlock that could ensue in congress. Recently one of the up-and-coming generics plunged as the FDA put a hold on their diabetes drug trial.
I took a long position in NVO on 11/27 and plan on holding this until I either get stopped out at 44 or we rally to previous highs
On this chart we have a corrective sequence ABC starting in 2014 and concluding in early 2017. On this chart, we can see the 30 day MA volume skyrockets in the beginning of 2017. This corresponds to the timing of the Obama administration focusing their healthcare attacks on big pharma, specifically drug pricing. We can even see a faint busted head and shoulders on this chart, with the right shoulder being broken by terrible guidance on earnings
At the peak in 2015, we also see a peak in operating profit margin. Over the next 12 month fundamentals began to draw back with book value/share, liquidity ratios, and margins all slowly declining. As Obamacare got pushed through US congress (where over 50% of revenue is earned), the outlook looked bleak. Then the Man who lives above the Guchi Store was elected, and big pharma saw hope on the horizon and began surging higher. This was a false bull market though; margins and liquidity ratios were not improving for NVO.
Then the surprise happened, President Trump began attacking pharma. Combined with the already volatile stock market NVO plunged to a correction right at the .618 fibonnaci level, if it maintains this as the low a perfect sign that the 2 impulse wave has just completed.
Where we stand now:
Novo Nordisk, one of the largest pill pushers was forced to lower outlooks with increasing competition from generics. With this pressure, the company has been forced to cut many US jobs and refocus R&D spending, rendering some patents and research useless. Over the last few years they've been forced to impair assets for use on their income statement, but NVO still maintains a 2.29 P/Tangible Book ratio, (better than peers: GSK, BMY, LLY). Gross margins have begun improving and P/S has landed at one of the lowest, if not the lowest level in the peer group. Improvement on the liquidity measures could send this stock flying, but most importantly is the deadlock that could ensue in congress. Recently one of the up-and-coming generics plunged as the FDA put a hold on their diabetes drug trial.
I took a long position in NVO on 11/27 and plan on holding this until I either get stopped out at 44 or we rally to previous highs
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