Analysts at Deutsche Bank have downgraded their rating on Novo Nordisk from “buy” to “hold” as the Danish firm’s stock continues to soar.
Mark Purcell at Deutsche Bank noted that Novo Nordisk’s share price has climbed 12% in the last ten days or so, following the announcement of the company’s excellent figures for 2004. Particularly impressive was the performance of its insulin products in the US and continued strong sales of the firm’s flagship haemostasis management treatment, NovoSeven (recombinant Factor VIIa) [[31/01/05d]].
The analyst said that the continued switch to premium-priced insulin analogues in the US and further growth in high-margin returns from NovoSeven is expected to drive 18% underlying earnings per share growth through 2004-08.
Mr Purcell added that “given these prospects for premium growth, together with minimal patent expirations and limited pipeline assumptions… Novo should trade at a 20%-25% premium to the sector with a current fair value of 307 kroner per share.”
At present, Novo shares have already reached that target, hence the recommended move back to ‘hold’ from the analysts. Deutsche Bank noted that these figures exclude a 250 million kroner gain that Novo Nordisk stands to make from its recent divestment of shares in Ferrosan, a Danish-based consumer healthcare and medical devices company.
