September 9, 2015

Novo Nordisk A/S Sponsored ADR Class

B
NYSE: NVO - Pharmaceuticals: Major

Grade Earnings Quick Facts

63.1 Last Earnings Release

Last Qtr. Actual vs. Est.

08/06/2015 Dividend Yield

$0.47 / $0.47 52 Wk High

0.95%

$60.23

Next Release 10/29/2015 N/A 52 Wk Low $41.90

$55.98
09/08/2015
Year Ending 12/31/2015 $1.95 Short Interest 0% of float
Rated 'BUY' since May 18th, 2013
Year Ending 12/31/2016 $2.32 Market Cap $113.6B

Overview
Company Performs Well In Fundamental Analysis
MarketGrader currently has a BUY rating on Novo
Nordisk A/S Sponsored ADR Class B (NVO), based on
a final overall grade of 63.1 scored by the company's
fundamental analysis. Novo Nordisk A/S Sponsored
ADR Class B scores at the 89th percentile among all
6120 North American equities currently followed by
MarketGrader. Our present rating dates to May 18,
2013, when it was N/A from a . Relative to the
Pharmaceuticals: Major sub-industry, which is
comprised of 13 companies, Novo Nordisk A/S
Sponsored ADR Class B's grade of 63.1 ranks fourth.
The industry grade leader is Lannett Company, Inc.
(LCI) with an overall grade of 91.2. The stock, up
18.42% in the last six months, has outperformed both
the Pharmaceuticals: Major group, up 1.48% and the
S&P 500 Index, which has returned -5.56% in the same
period. Please go to pages two and three of this report
for a complete breakdown of NVO's fundamental
analysis.

Price, Rating and Sentiment History - 2 Years

MarketGrader.com ©2010. MarketGrader.com Corp. All Rights Reserved. 1

 September 9, 2015

Novo Nordisk A/S Sponsored ADR Class

B
NYSE: NVO - Pharmaceuticals: Major 63.1
While Not Entirely Negative, Growth Indicators Show Several Signs of
Growth B- Weakness
Novo Nordisk A/S Sponsored ADR Class B's latest financial report wasn't
Market Growth LT B-
very encouraging from a revenue growth perspective, extending an
anemic growth record also evident from a long term view. The company's
Market Growth ST Dtotal revenue last quarter was $4.03 billion, only 1.14% higher than the
EPS Growth year earlier period's revenue of $3.98 billion. In the 12 months ended also
A+
last quarter, Novo Nordisk A/S Sponsored ADR Class B's total sales were
Growth Potential D$15.76 billion, a 22.04% rise from the $12.91 billion in revenue booked in
the equivalent period ended three years ago, a poor showing over such a Revenue Qtrly. 06/30/2015 $4B
Earnings Momentum Dlong period of time. As such, any boost to the company's bottom line will Revenue Qtrly. Year Ago $4B
have to come from cutting costs, suggesting it will be important for Revenue 1 Yr. Chg. 1.14%
Earnings Surprise B-
investors to watch closely the company's margins in the next couple of Revenue 12 Mo. Tr. Latest $15.8B
quarters. The company also reported in its latest earnings announcement that profits had fallen from the year Revenue 12 Mo. Tr. 3Y Ago $12.9B
earlier period, reversing a trend of long term profit growth. By long term growth we refer to the change in full year Revenue 12 Mo. Tr. 3Y Chg. 22.04%
(12-month trailing) net income from the comparable period three years earlier. Novo Nordisk A/S Sponsored ADR
Class B's Second quarter net fell -3.56% to $1.24 billion from the year earlier profit of $1.29 billion (excluding
extraordinary items) , which contrasts with its growth in 12-month trailing profit over a three year period. Also
including last quarter's results, the company's profit grew to $4.93 billion for the 12 months ended June 30, 2015,
a 45.44% jump from full year profit of $3.39 billion reported for the period ended three years earlier. The
company's small year-to-year margin expansion during its last quarter, with cash flow, operating and net margins
rising by an average 4.09%, extends a trend from its two previous quarters.
Despite meeting the consensus estimate of $0.47 per share in its Second quarter report, announced August 06,
2015, the company's stock dropped -3.66% following the announcement, a sign investors were expecting the
company to beat the street or provide better guidance for future earnings. It has now exceeded the consensus
earnings estimate by an average of 1.58% in its last six reported quarters, a favorable indicator for the stock.
Net Income Qtrly. 06/30/2015 $1.2B
Net Income Qtrly. Year Ago $1.3B
Net Income 1 Yr. Chg. (3.56%)
Net Income 12 Mo. Tr. Latest $4.9B
Net Income 12 Mo. Tr. 3Y Ago $3.4B
Net Income 12 Mo. Tr. 3Y Chg. 45.44%

Company's Shares Seem Fully Priced and Buying at this Level Would
Value B- Be Highly Speculative
Novo Nordisk A/S Sponsored ADR Class B's shares trade currently at
Capital Structure A
58.72 times the company's 12-months' forward earnings per share, more
than three times our "optimum" P/E of 21.96. This ratio is calculated by
P/E Analysis F
MarketGrader by looking at the last two years' quarterly earnings, in 12-
Price/Book Ratio month rolling periods, in order to determine their growth rate. On this
F
account Novo Nordisk A/S Sponsored ADR Class B's earnings per share
Price/Cash Flow Ratio B-
have grown at an annualized rate of 10.98% during this time. Based on
this strong growth rate and its healthy overall Profitability grade, the P/E Ratio 12 Mo. Tr. 06/30/2015 29.94
Price/Sales Ratio C
company may be gaining market share. In order to make these gains
Optimum P/E Ratio 21.96
sustainable without adversely impacting its financial performance its
Market Value B
margin growth needs to continue. The stock's forward P/E of 58.72, Forward P/E Ratio 58.72
S&P 500 Forward P/E Ratio 15.20
based on the next four quarters' estimates, is higher than its trailing P/E and the S&P 500's forward P/E of 15.20.
It would seem therefore that investors's growth expectations may already be factored into the stock price despite Price to (Tangible) Book Ratio 25.72
the company's positive fundamentals. Price-to-Cash Flow Ratio 25.08
Price/Sales Ratio 7.33
Novo Nordisk A/S Sponsored ADR Class B's current market value is 25.72 times its tangible book value (which
excludes goodwill and other intangible assets--a very high multiple. Even when taking into account intangibles,
which account for only 3.73% of total stockholders' equity, the stock's price to book ratio of 25.72 still seems like a
rich multiple. From a cash flow perspective the shares look pricey considering investors are paying 25.08 times
the $2.23 in cash flow per share generated by the company in the last twelve months. This is a significant
premium even if the company's fundamentals look generally strong. Its shares also trade at 7.33 times trailing
12-month sales, a 67.60% premium to its industry average of 4.37. Our final value indicator looks at the
relationship between the company's current market capitalization and its operating profits after deducting taxes.
Novo Nordisk A/S Sponsored ADR Class B's $113.65 billion market cap is, by this measure, fairly priced at 21.32
times its most recent quarterly net income (including depreciation).

MarketGrader.com ©2010. MarketGrader.com Corp. All Rights Reserved. 2

 September 9, 2015

Novo Nordisk A/S Sponsored ADR Class

B
NYSE: NVO - Pharmaceuticals: Major 63.1
Profitability Record Is Excellent Across the Board Suggesting a Very
Profitability A Well Managed Operation
Novo Nordisk A/S Sponsored ADR Class B is a very profitable company
Asset Utilization A+
with strong overall indicators in this section of our analysis. The
company's different measures of return to shareholders and margins are
Capital Utilization B+
typically above those of its peers. In the last four quarters Novo Nordisk
Operating Margins A/S Sponsored ADR Class B earned a profit of $4.93 billion, equivalent to
A
31.31% of its sales in the period. Operating income during that same
Relative Margins A+
period accounted for 40.68% of sales, 31.46% higher than the average
operating margin for the Pharmaceuticals: Major industry, which was
Return on Equity A+
25.86%. Novo Nordisk A/S Sponsored ADR Class B's return on equity,
based on trailing 12-month earnings, is not only outstanding at 84.44%,
Quality of Revenues A+
but it's higher than the 70.22% return on equity from the year earlier
period. This is an important metric of management efficiency in our grading system, as it measures the amount
earned on an investment in the company's common stock.
In light of the company's strong performance its capital structure might be too conservative, with total debt being
less than half its total equity. Its long term debt accounts for only 0.00% of total capital. Novo Nordisk A/S
Sponsored ADR Class B's core earnings in the last twelve months grew moderately from the twelve months
ended a year earlier. The company's EBITDA for the most recent period was $7.00 billion, or 4.01% above the
$6.73 billion earned from its core operations in the prior period. EBITDA is used by MarketGrader to measure the
company's true earnings power since it includes interest expenses, income taxes, depreciation and amortization,
all non-operating expenses, which are nevertheless accounted for in other parts of our analysis that look at EPS
gains and net income.

Company's Cash Flow Is Very Well Managed as Our Analysis Reflects

Cash Flow A a Very Healthy Operation
Novo Nordisk A/S Sponsored ADR Class B made $1.78 billion in cash
Cash Flow Growth B-
flow last quarter, 19.17% better than the $1.49 billion reported last year
for the comparable period. While very healthy, this latest growth rate is
EBIDTA Margin A-
significantly lower than the 32.72% increase in twelve month trailing cash
Debt/Cash Flow Ratio flow compared to the year earlier period, underscoring a slowdown in the
A+
company's core operations. This could lead to lower earnings
Interest Cov. Capacity A+
expectations and consequently a lower valuation for the stock. Even
though the company has $109.93 million in total debt, its net debt is Cash Flow Qtrly. 06/30/2015 $1.8B
Economic Value A+
virtually zero since it has $1.82 billion in cash on hand; and since it
Cash Flow Qtrly Year Ago $1.5B
generated $1.92 billion in earnings before interest, taxes, depreciation
Retention Rate A+
and amortization last quarter, it's safe to say its liquidity is remarkable. Cash Flow 1 Yr. Chg. 19.17%
Cash Flow 12 Mo. Tr. Latest $5.8B
Therefore the company's debt is not only very manageable with its own cash flow but could be increased if it
wanted to pursue strategic growth opportunities. The company also has the ability to enhance shareholder returns Cash Flow 12 Mo. Tr. 3Y Ago $4.4B
through dividends or by repurchasing its own shares, boosting the future value of its earnings. The current Cash Flow 12 Mo. Tr. 3Y Chg. 30.9%
amount of cash and equivalents it has on hand is 47.45% higher than a year ago when it had $1.24 billion; while Free Cash Flow Last Qtr. $1.6B
in this same period its leverage also increased, with total debt as a percentage of total capital climbing from
1.10% to 1.85% today, the company's cash on hand is still larger than its debt.
An important indicator of management efficiency used by MarketGrader is Economic Value Added, or EVA, Economic Value
which measures each company's true return to shareholders after accounting not only for the cost of running the Total Invested Capital $6.0B
business (operating costs) but also the cost of the capital it employs. By measuring the real cost of capital, both Return on Inv. Capital 109.73%
equity and debt, EVA measures the creation of true economic profit. In this case Novo Nordisk A/S Sponsored Weighted Cost of Equity 8.07%
ADR Class B had $5.84 billion in invested capital in its most recent quarter, a combination of both equity and long Weighted Cost of Debt 0.00%
term debt. However, the company's weighted cost of equity of 8.07% is much larger than the weighted cost of Total Cost of Capital 8.07%
debt, which is 0.00%. When combined, the two result in a total cost of capital of 8.07%, quite low compared to the Economic Value Added 101.66%
company's total return on invested capital of 109.73% based on 12-month trailing operating income. The result is
an excellent economic value added of 101.66%, a very high return to investors after all capital costs are covered.
Novo Nordisk A/S Sponsored ADR Class B, which doesn't currently pay a dividend, actually used to do so until
suspending payouts in the March 31, 2015. Novo Nordisk A/S Sponsored ADR Class B spent $1.84 billion paying
out common dividends in the last 12 months, equivalent to 31.93% of its total cash flow and 37.33% of what it
earned after taxes. This payout ratio, which actually represents a small increase from the 37.02% of earnings paid
out in the year ended a quarter earlier, appears sustainable as long as the company maintains its generally strong
fundamentals.

MarketGrader.com ©2010. MarketGrader.com Corp. All Rights Reserved. 3

 September 9, 2015

Novo Nordisk A/S Sponsored ADR Class

B
NYSE: NVO - Pharmaceuticals: Major 63.1
Profile
Novo Nordisk A/S engages in the development, manufacturing, and sale of pharmaceutical products. Key Facts:
The company operates through the Diabetes Care and Biopharmaceuticals segments. The Diabetes Novo Allé
Care segment includes research, development, manufacturing, and marketing of products within the Bagsværd , 2880
areas of insulin, glucagon-like-peptide 1 and related delivery systems, oral antidiabetic products, and Phone:
www.novonordisk.com
obesity. The Biopharmaceuticals segment covers research, development, manufacturing, and
distribution of products within haemophilia growth hormone, hormone replacement, inflammation and
other therapy areas. The company was founded in 1989 and is headquartered in Bagsværd, Biggest Company in Sub-Industry
Denmark. Johnson & Johnson (JNJ)
Grade 64.5
Market Cap:$260.13 billion

Smallest Company in Sub-Industry

Sucampo Pharmaceuticals,
Grade 81.4
Market Cap:$1.16 billion

MarketGrader Dilution Analysis Income Last Qtr 12 Mo.

Statement (06/2015) Trailing
Impact of Change in Shares on EPS - Q3 2015
Dilution Summary Revenue $4.0B $15.8B
*EPS Latest $0.48 Op. Income $1.8B $6.4B
*EPS Year Ago $0.49
Net Income $1.2B $4.9B
EPS Change 1 Yr. (2%)
*EPS $0.48 0
C. Shares - Latest(M) 2,584
C. Shares - Yr Ago(M) 2,637 *Earnings per share are based on fully diluted net income per share
excluding extrodinary items. This number may not match the
C. Shares - 1Yr Chg. (2%) headline number reported by the company.

EPS if Yr. Ago Shares $0.47

EPS Chg. if Yr. Ago (4%)
EPS Loss from Dilution $0.01
Balance Sheet Latest

Total Assets $12.1B

*Earnings per share are based on fully diluted net income per share excluding extrodinary items. This number may not match the headline number reported by the company.

Total Debt $110M

Stockholders Eq. $5.8B

All numbers in millions except EPS

Ratios
Price/Earnings (12 mo. trailing) 29.94

Price/Tangible Book 25.72

Price/Cash Flow 25.08

Price/Sales 7.33

Debt/Cash Flow 1.91

Return on Equity 84.45%

Gross Margin (12 mo. trailing) 85.74%

Operating Margin (12 mo. trailing) 40.68%

Total Assets $12.1B '10 '11 '12 '13 '14 '15
Net Profit Margin (12 mo. trailing) 31.31%
Intangible Assets $218M Qtr 1 0.00 0.00 0.00 0.00 0.00 0.00
Long Term Debt 0 Qtr 2 0.00 0.00 0.00 0.00 0.00 0.00
Total Debt $110M Qtr 3 0.00 0.00 0.00 0.00 0.00
Book Value $5.8B Qtr 4 1.36 1.83 2.26 0.61 0.53
Enterprise Value ($1.7B)

MarketGrader.com ©2010. MarketGrader.com Corp. All Rights Reserved. 4

 September 9, 2015

Novo Nordisk A/S Sponsored ADR Class

B
NYSE: NVO - Pharmaceuticals: Major 63.1
Top Down Analysis
# Ticker Grade Sentiment Name Price Next EPS
1 GILD 93.26 P Gilead Sciences, Inc. $104.90 10/27/2015
Health Care 2 LCI 91.19 Lannett Company, Inc. $55.44 11/05/2015
N

Stocks in Sector: 701 3 TARO 83.75 N Taro Pharmaceutical Industries Ltd. $134.81 08/07/2015
Buys: 76 (10.84%) 4 SCMP 81.36 P Sucampo Pharmaceuticals, Inc. Class A $25.54 11/05/2015
Holds: 77 (10.98%)
Sells: 548 (78.17%) 5 ABMD 79.13 P ABIOMED, Inc. $96.20 11/05/2015
6 CBPO 79.04 P China Biologic Products, Inc. $99.37 11/03/2015
No. of stocks at:
7 AMAG 78.42 P AMAG Pharmaceuticals, Inc. $62.23 10/29/2015
52-Wk. High: 9
52-Wk. Low: 18 8 NLNK 78.38 N Newlink Genetics Corporation $46.81 11/05/2015
Above 50 & 200-day MA: 148 9 ICLR 76.63 P ICON Plc $78.57 10/22/2015
Below 50 & 200-day MA: 353
10 BIIB 75.29 N Biogen Inc. $308.74 10/27/2015
59 NVO 63.12 P Novo Nordisk A/S Sponsored ADR Class $55.98 10/29/2015

# Ticker Grade Sentiment Name Price Next EPS

1 LCI 91.19 N Lannett Company, Inc. $55.44 11/05/2015
Pharmaceuticals: Major
2 SCMP 81.36 P Sucampo Pharmaceuticals, Inc. Class A $25.54 11/05/2015
Stocks in Sub-Industry: 13 3 JNJ 64.46 N Johnson & Johnson $93.94 10/13/2015
Buys: 4 (30.77%)
4 NVO 63.12 P Novo Nordisk A/S Sponsored ADR Class $55.98 10/29/2015
Holds: 3 (23.08%)
Sells: 6 (46.15%) 5 GSK 58.65 N GlaxoSmithKline plc Sponsored ADR $40.57 10/28/2015
6 MRK 56.78 N Merck & Co., Inc. $52.69 10/26/2015
No. of stocks at:
52-Wk. High: 0 7 ABBV 51.21 P AbbVie, Inc. $60.57 10/30/2015
52-Wk. Low: 0 8 PFE 49.18 P Pfizer Inc. $32.53 11/03/2015
Above 50 & 200-day MA: 1
9 LLY 36.42 P Eli Lilly and Company $82.88 10/22/2015
Below 50 & 200-day MA: 8
10 NVS 35.73 N Novartis AG Sponsored ADR $96.24 10/27/2015

1. Price Trend. B+ 2. Price Momentum. A-

8.5
3. Earnings Guidance. A- 4. Short Interest. A-

Copyright 2010 MarketGrader.com Corp. All rights reserved. Any unauthorized use or disclosure is prohibited. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or any options, futures or other derivatives related to
such securities ("related investments"). The information herein was obtained from various sources; we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not
have regards to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment
strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security's price or value may
rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. MarketGrader does not make markets
in any of the securities mentioned in this report. MarketGrader does not have any investment banking relationships. MarketGrader and its employees may have long/short positions or holdings in the securities or other related investments of companies mentioned
herein. Officers or Directors of MarketGrader.com Corp. are not employees of covered companies. MarketGrader or any of its employees do not own shares equal to one percent or more of the company in this report.

MarketGrader.com ©2010. MarketGrader.com Corp. All Rights Reserved. 5