Share price performance
Novo Nordisk (NVO) announced its earnings for fiscal 2015 on February 3, 2016. Disappointment in its earnings per share saw its share price fall 6% on the day.
Investor sentiment and overreaction were the likely reasons behind the fall. For details on NVO’s share price performance following its fiscal 2015 earnings, you can refer to Why Did Novo’s Share Price Fall after Fiscal 2015 Earnings?
Recent events that supported NVO’s share price
On March 4, 2016, Novo announced a positive outcome from its LEADER study. The trial details can be found at Why Investors Are Cheering the Results of Novo’s Victoza Trials.
On April 28, 2016, NVO announced positive results from its SUSTAIN 6 trial. SUSTAIN 6 was a Phase 3a trial for an investigational glucagon-like peptide-1 (or GLP-1) analogue called semaglutide, which will be a once-weekly subcutaneous injection for type 2 diabetes patients. The trial data successfully showed significant cardiovascular risk reduction. Novo expects regulatory reviews of the drug in the United States and European Union (or EU) in 4Q16.
Following NVO’s 1Q16 results, which exceeded expectations, the company’s share price fell marginally by 0.45%. Novo’s lowered sales growth expectations for fiscal 2016 could have been the reason for the marginal fall.
It’s often risky to directly invest in a biotechnology company, as any news release for the success or failure of its products can result in volatility in its stock price. To remain comparatively safe, investors can choose ETFs such as the PowerShares International Dividend Achievers ETF (PID).
PID holds 4.4% of its assets in pharmaceuticals companies. It holds 1.1% and 0.14%, respectively, in Sanofi (SNY) and Shire (SHPG). Teva Pharmaceuticals (TEVA) makes up 0.62% of the fund’s total assets. Novo’s share in PID’s total holdings is 0.4%.
We’ll discuss Novo’s segmental performance during 1Q16 in the next part of the series.