Jim Cramer Says Novo Nordisk A/S (NVO) ‘Doesn’t Hold A Candle To Eli Lilly’
We recently published an article titled, Jim Cramer’s Latest Lightning Round: 12 Stocks to Watch. In this article, we are going to take a look at where Novo Nordisk A/S (NYSE:NVO) stands against other stocks discussed by Jim Cramer during the latest lightning round.
On Tuesday, Jim Cramer, host of Mad Money, shared his thoughts on the market’s recent volatility and offered advice to investors regarding earnings reports. He cautioned against making trades based solely on immediate stock reactions following earnings announcements, as many of these movements might not be justified.
“The absurdity of earnings season has arrived. It didn’t take long, did it? People are already doing stupid things. And you know what? I gotta point them out to you so that you don’t make the same mistakes.”
Cramer emphasized his mission to guide individuals toward becoming more thoughtful investors, rather than impulsive traders. He noted that the Dow Jones Industrial Average dropped 325 points, while the S&P 500 declined by 0.76%, and the Nasdaq Composite fell 1.01%.
Cramer referred to this phenomenon as part of what he calls the quarterly repricing process, which is the earnings season. He explained that, typically, most stocks tend to move in tandem with the S&P 500 unless a significant event alters the market. In the absence of such an event, stock movements are often influenced by external factors that may have only a tenuous connection to a company’s actual future performance. He further clarified his perspective and stated:
“Now, I want to make one thing clear. I’m not saying that everybody’s a moron. I’m saying there are details that inform people are looking for benchmarks we’ve accepted going into earnings. Yet for the first few moments of trading, there’s just obviously oblivious action based on who knows what. It’s definitely not the key metrics. It’s definitely not the homework.”
Ultimately, Cramer described this chaotic trading behavior as a clumsy way for Wall Street to reassess stock prices in relation to their peers, driven by a flurry of parsed headlines during earnings season. He expressed relief that this sort of disorganized trading only occurs four times a year, even as he acknowledged that this is a crucial period when a stock can become detached from the S&P 500.
Concluding his thoughts, Cramer emphasized:
“Yet, if you’re not a professional, you should not be involved in this process. There are so many people playing with so much money, professionals who pay people fortunes to figure this stuff out. Let them fight to set the price. For regular investors like you, trying to trade that initial post-earnings action is just an easy way to lose money, four times a year, like clockwork.”
Our Methodology
For this article, we compiled a list of 12 stocks that were discussed by Cramer during lightning rounds of Mad Money’s episodes on October 14, 15, and 16. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Cramer Says Novo Nordisk ‘Doesn’t Hold A Candle To Eli Lilly’
Novo Nordisk A/S (NYSE:NVO)
Number of Hedge Fund Holders: 67
When Cramer was asked about Novo Nordisk A/S (NYSE:NVO), he said, “Now look, I’ve gotta tell you, Novo Nordisk doesn’t hold a candle to Eli Lilly… Lilly’s the one.”
Novo Nordisk (NYSE:NVO) is engaged in the research, development, manufacture, and distribution of pharmaceutical products. With a legacy spanning over eight decades, the company has established a strong presence in diabetes care, holding a significant share of both the diabetes treatment and insulin markets. Its growth has been largely driven by its GLP-1 therapies, particularly Ozempic, which is used for diabetes management, and Wegovy, aimed at obesity treatment.
The company is actively pursuing the development of successors to Ozempic, leveraging its financial resources and entering into collaboration agreements with biotech firms that are working on innovative solutions. On September 16, it announced a collaboration with Korro Bio focused on drug development, valued at $530 million. The partnership includes funding for research and development, milestone payments, royalties, and an upfront payment to initiate the collaboration. Korro Bio is known for its expertise in RNA editing, with a platform that allows for the modification of messenger RNA (mRNA) before it is translated into proteins, potentially opening new avenues for therapeutic advancements.
In a competitive industry, maintaining a supply that meets market demand has emerged as a crucial factor for companies like Novo Nordisk (NYSE:NVO). Rival companies like Eli Lilly are not hesitant to capitalize on opportunities to increase market share. In February, the company made headlines with its intent to acquire Catalent, a contract development and manufacturing organization, in a deal valued at $16.5 billion. However, the acquisition has drawn scrutiny, particularly from Senator Elizabeth Warren, who has raised concerns about its potential implications for competition in the industry.
Overall, NVO ranks 3rd on our list of stocks discussed by Jim Cramer during the latest lightning round. While we acknowledge the potential of NVO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.