BUY BUY BUY BUY: Novo Nordisk A/S

September 13, 2015
NYSE: NVO
NOVO NORDISK A/S

BUY HOLD SELL
BUY
RATING SINCE 09/10/2008
A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F TARGET PRICE $74.26
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 9/10/2015
$0.53 0.94% 1.07 $116.7 Billion $41.72-$60.34 $56.58
Sector: Health Care Sub-Industry: Pharmaceuticals Source: S&P

Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years
NVO BUSINESS DESCRIPTION
Novo Nordisk A/S, a healthcare company, engages 75
TARGET
TARGET
TARGETPRICE
TARGET PRICE
PRICE$74.26
$74.26
$74.26
in the discovery, development, manufacture, and 70
marketing of pharmaceutical products worldwide.
65
It operates in two segments, Diabetes Care and
Biopharmaceuticals. 60
55
STOCK PERFORMANCE (%)
3 Mo. 1 Yr. 3 Yr (Ann) 50
Price Change -2.49 23.13 21.47 45
40
GROWTH (%)
Last Qtr 12 Mo. 3 Yr CAGR 35
Revenues 5.99 -8.76 7.36 30
Net Income 1.99 -7.10 13.81 Rating History
EPS 2.04 -5.95 16.37 BUY
RETURN ON EQUITY (%) Volume in Millions

20
NVO Ind Avg S&P 500
Q2 2015 77.93 20.10 13.71 10
Q2 2014 72.86 19.08 14.43
0
Q2 2013 69.74 15.07 13.15 2014 2015
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate NOVO NORDISK A/S (NVO) a BUY. This is based on the convergence of positive investment
measures, which should help this stock outperform the majority of stocks that we rate. The company's
strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, notable
return on equity, expanding profit margins and good cash flow from operations. Although the company may
harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
HIGHLIGHTS
32.52 33.53 19.67 The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior,
revenues slightly increased by 6.0%. This growth in revenue appears to have trickled down to the company's
NVO Ind Avg S&P 500
bottom line, improving the earnings per share.
EPS ANALYSIS¹ ($) The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting
the earnings growth and other positive factors similar to those we have cited here. Turning our attention to
the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down
market. However, in any other environment, this stock still has good upside potential despite the fact that it
has already risen in the past year.
Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of
strength within the company. Compared to other companies in the Pharmaceuticals industry and the overall
Q1 0.38
Q2 0.44
Q3 0.47
Q4 0.44
Q1 0.45
Q2 0.49
Q3 0.35
Q4 0.35
Q1 0.54
Q2 0.50
market, NOVO NORDISK A/S's return on equity significantly exceeds that of both the industry average and the
S&P 500.
2013 2014 2015
NA = not available NM = not meaningful
The gross profit margin for NOVO NORDISK A/S is currently very high, coming in at 85.70%. It has increased
from the same quarter the previous year. Along with this, the net profit margin of 31.12% significantly
1 Compustat fiscal year convention is used for all fundamental
data items. outperformed against the industry average.
Net operating cash flow has increased to $1,813.81 million or 21.87% when compared to the same quarter last
year. The firm also exceeded the industry average cash flow growth rate of -10.24%.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: September 13, 2015 PAGE 1
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
September 13, 2015
NYSE: NVO
NOVO NORDISK A/S

Sector: Health Care Pharmaceuticals Source: S&P
$0.53 0.94% 1.07 $116.7 Billion $41.72-$60.34 $56.58
PEER GROUP ANALYSIS INDUSTRY ANALYSIS

REVENUE GROWTH AND EBITDA MARGIN*
80%
AGN PEER GROUP: Pharmaceuticals

Recent Market Price/ Net Sales Net Income
FA
V
Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M)
OR
AB
NVO NOVO NORDISK A/S 56.58 116,700 32.52 14,538.32 4,557.33

LE
ABBV ABBVIE INC 59.58 98,621 47.29 20,986.00 2,084.00

BMY BRISTOL-MYERS SQUIBB CO 58.75 97,970 54.91 16,383.00 1,790.00
LLY LILLY (ELI) & CO 80.84 89,614 41.89 19,620.30 2,059.40
VRX AZN ASTRAZENECA PLC 33.28 84,118 70.81 26,769.00 1,180.00
Revenue Growth (TTM)
VRX VALEANT PHARMACEUTICALS IN 228.79 78,427 94.15 9,259.50 831.00

ABBV PFE PFIZER INC 32.62 201,179 22.97 48,196.00 8,898.00
UN
FA
BMY AZN GSK GLAXOSMITHKLINE PLC 40.24 195,298 6.53 48,613.57 14,987.92
VO
-20%
PFE
R
MRK MERCK & CO 52.72 148,493 15.42 40,249.00 9,850.00

AB
LLY
LE
MRK SNY SANOFI 49.77 130,620 24.52 39,742.81 5,357.94

5% 55%
AGN ALLERGAN PLC 293.60 120,673 NM 17,729.20 -2,530.80
EBITDA Margin (TTM)
The peer group comparison is based on Major Pharmaceuticals companies of comparable size.
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $78.4 Billion and $201.2
Billion. Companies with NA or NM values do not
appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
REVENUE GROWTH AND EARNINGS YIELD

80%
AGN
FA
VOR
AB
LE
VRX
Revenue Growth (TTM)
ABBV
UN
GSK
FA
AZN BMY
VO
-20%
PFE
R
AB
LLY NVO MRK

LE
-4% SNY 16%

Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -15% and
75.3%. Companies with NA or NM values do not
appear.
September 13, 2015
NYSE: NVO
NOVO NORDISK A/S

$0.53 0.94% 1.07 $116.7 Billion $41.72-$60.34 $56.58
COMPANY DESCRIPTION STOCK-AT-A-GLANCE

Novo Nordisk A/S, a healthcare company, engages in the Below is a summary of the major fundamental and technical factors we consider when determining our
discovery, development, manufacture, and marketing of overall recommendation of NVO shares. It is provided in order to give you a deeper understanding of our
pharmaceutical products worldwide. It operates in two rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
segments, Diabetes Care and Biopharmaceuticals. The important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
Diabetes Care segment covers insulins, GLP-1 analog, understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
obesity, and oral antidiabetic drugs, as well as other valuation. Please refer to our Valuation section on page 5 for further information.
protein related products comprising glucagon, protein
related delivery systems, and needles. The FACTOR SCORE
Biopharmaceuticals segment offers products in the areas
of haemophilia care, growth hormone therapy, and Growth out of 5 stars 4.5
hormone replacement therapy. The company markets and Measures the growth of both the company's income statement and weak strong
distributes its products through its subsidiaries, cash flow. On this factor, NVO has a growth score better than 80% of
distributors, and independent agents. Novo Nordisk A/S the stocks we rate.
was founded in 1925 and is headquartered in Bagsvaerd,
Denmark.
Total Return out of 5 stars 4.0
NOVO NORDISK A/S Measures the historical price movement of the stock. The stock weak strong
Novo Alle performance of this company has beaten 70% of the companies we
Bagsvaerd 2880 cover.
DNK
Phone: 45 44 44 88 88 Efficiency out of 5 stars 5.0
Fax: 45 44 49 05 55 Measures the strength and historic growth of a company's return on weak strong
http://www.novonordisk.com invested capital. The company has generated more income per dollar of
Employees: 41000 capital than 90% of the companies we review.
Price volatility out of 5 stars 5.0

Measures the volatility of the company's stock price historically. The weak strong
stock is less volatile than 90% of the stocks we monitor.
Solvency out of 5 stars 4.5

Measures the solvency of the company based on several ratios. The weak strong
company is more solvent than 80% of the companies we analyze.
Income out of 5 stars 3.0

Measures dividend yield and payouts to shareholders. The company's weak strong
dividend is higher than 50% of the companies we track.
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
September 13, 2015
NYSE: NVO
NOVO NORDISK A/S

$0.53 0.94% 1.07 $116.7 Billion $41.72-$60.34 $56.58
Consensus EPS Estimates² ($) FINANCIAL ANALYSIS

IBES consensus estimates are provided by Thomson Financial NOVO NORDISK A/S's gross profit margin for the second quarter of its fiscal year 2015 is essentially
unchanged when compared to the same period a year ago. The company managed to grow both sales and
net income at a faster pace than the average competitor in its industry this quarter as compared to the same
quarter a year ago. NOVO NORDISK A/S has weak liquidity. Currently, the Quick Ratio is 0.67 which shows a
lack of ability to cover short-term cash needs. The company's liquidity has decreased from the same period
last year.
During the same period, stockholders' equity ("net worth") has decreased by 13.13% from the same quarter
0.46 1.99 E 2.27 E last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial
Q3 FY15 2015(E) 2016(E) difficulties could develop in the future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
INCOME STATEMENT next 12-months. To learn more visit www.TheStreetRatings.com.
Q2 FY15 Q2 FY14
Net Sales ($mil) 4,190.19 3,953.35
EBITDA ($mil) NA NA
EBIT ($mil) 1,873.07 1,559.11
Net Income ($mil) 1,304.03 1,278.47
BALANCE SHEET
Q2 FY15 Q2 FY14
Cash & Equiv. ($mil) 1,770.08 1,197.78
Total Assets ($mil) 12,157.32 11,693.38
Total Debt ($mil) 110.04 74.55
Equity ($mil) 5,847.59 6,731.85
PROFITABILITY
Q2 FY15 Q2 FY14
Gross Profit Margin 85.70% 83.03%
EBITDA Margin NA NA
Operating Margin 44.70% 39.44%
Sales Turnover 1.20 1.36
Return on Assets 37.48% 41.94%
Return on Equity 77.93% 72.86%
DEBT
Q2 FY15 Q2 FY14
Current Ratio 1.23 1.44
Debt/Capital 0.02 0.01
Interest Expense 264.72 NA
Interest Coverage 7.08 NA
SHARE DATA
Q2 FY15 Q2 FY14
Shares outstanding (mil) 2,593 2,647
Div / share 0.00 0.00
EPS 0.50 0.49
Book value / share 2.26 2.54
Institutional Own % NA NA
Avg Daily Volume 1,274,298 1,623,079
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
September 13, 2015
NYSE: NVO
NOVO NORDISK A/S

$0.53 0.94% 1.07 $116.7 Billion $41.72-$60.34 $56.58
RATINGS HISTORY VALUATION

Our rating for NOVO NORDISK A/S has not changed BUY. NOVO NORDISK A/S's P/E ratio indicates a discount compared to an average of 33.53 for the
since 9/21/2004. As of 9/10/2015, the stock was Pharmaceuticals industry and a significant premium compared to the S&P 500 average of 19.67. For additional
trading at a price of $56.58 which is 6.2% below its comparison, its price-to-book ratio of 25.09 indicates a significant premium versus the S&P 500 average of
52-week high of $60.34 and 35.6% above its 52-week 2.62 and a significant premium versus the industry average of 6.40. The price-to-sales ratio is well above both
low of $41.72. the S&P 500 average and the industry average, indicating a premium.
2 Year Chart
$60 Price/Earnings 1 2 3 4 5 Price/CashFlow 1 2 3 4 5
BUY: $33.24
premium discount premium discount

NVO 32.52 Peers 33.53 NVO 27.37 Peers 20.75
$50 • Average. An average P/E ratio can signify an • Premium. The P/CF ratio, a stock’s price divided by
industry neutral price for a stock and an average the company's cash flow from operations, is useful
$40 growth expectation. for comparing companies with different capital
• NVO is trading at a valuation on par with its peers. requirements or financing structures.
• NVO is trading at a significant premium to its peers.
2013 2014
Price/Projected Earnings 1 2 3 4 5 Price to Earnings/Growth 1 2 3 4 5
premium discount premium discount
NVO 24.98 Peers 16.92 NVO 1.52 Peers 0.89
MOST RECENT RATINGS CHANGES
• Premium. A higher price-to-projected earnings ratio • Premium. The PEG ratio is the stock’s P/E divided by
Date Price Action From To than its peers can signify a more expensive stock the consensus estimate of long-term earnings
9/10/13 $33.24 No Change Buy Buy or higher future growth expectations. growth. Faster growth can justify higher price
Price reflects the closing price as of the date listed, if available • NVO is trading at a significant premium to its peers. multiples.
• NVO trades at a significant premium to its peers.
RATINGS DEFINITIONS & Price/Book 1 2 3 4 5 Earnings Growth 1 2 3 4 5
DISTRIBUTION OF THESTREET RATINGS premium discount lower higher
(as of 9/10/2015) NVO 25.09 Peers 6.40 NVO -5.95 Peers -110.42
• Premium. A higher price-to-book ratio makes a • Higher. Elevated earnings growth rates can lead to
41.74% Buy - We believe that this stock has the stock less attractive to investors seeking stocks capital appreciation and justify higher
opportunity to appreciate and produce a total return of with lower market values per dollar of equity on the price-to-earnings ratios.
more than 10% over the next 12 months. balance sheet. • NVO is expected to have an earnings growth rate
• NVO is trading at a significant premium to its peers. that significantly exceeds its peers.
31.94% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of Price/Sales 1 2 3 4 5 Sales Growth 1 2 3 4 5
shares at this time and that its likelihood of positive total premium discount lower higher
return is roughly in balance with the risk of loss. NVO 10.09 Peers 9.50 NVO -8.76 Peers 7.86
• Average. In the absence of P/E and P/B multiples, • Lower. A sales growth rate that trails the industry
26.32% Sell - We believe that this stock is likely to the price-to-sales ratio can display the value implies that a company is losing market share.
decline by more than 10% over the next 12 months, with investors are placing on each dollar of sales. • NVO significantly trails its peers on the basis of
the risk involved too great to compensate for any • NVO is trading at a valuation on par with its sales growth
possible returns. industry on this measurement.
DISCLAIMER:
TheStreet Ratings
14 Wall Street, 15th Floor The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
New York, NY 10005 TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
www.thestreet.com via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
Research Contact: 212-321-5381
Sales Contact: 866-321-8726 TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
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BUY BUY BUY BUY: Novo Nordisk A/S

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September 13, 2015

NOVO NORDISK A/S

Sector: Health Care Sub-Industry: Pharmaceuticals Source: S&P

RETURN ON EQUITY (%) Volume in Millions

NOVO NORDISK A/S

PEER GROUP ANALYSIS INDUSTRY ANALYSIS

AGN PEER GROUP: Pharmaceuticals

NVO NOVO NORDISK A/S 56.58 116,700 32.52 14,538.32 4,557.33

ABBV ABBVIE INC 59.58 98,621 47.29 20,986.00 2,084.00

VRX VALEANT PHARMACEUTICALS IN 228.79 78,427 94.15 9,259.50 831.00

MRK MERCK & CO 52.72 148,493 15.42 40,249.00 9,850.00

MRK SNY SANOFI 49.77 130,620 24.52 39,742.81 5,357.94

REVENUE GROWTH AND EARNINGS YIELD

LLY NVO MRK

-4% SNY 16%

NOVO NORDISK A/S

COMPANY DESCRIPTION STOCK-AT-A-GLANCE

Price volatility out of 5 stars 5.0

Solvency out of 5 stars 4.5

Income out of 5 stars 3.0

THESTREET RATINGS RESEARCH METHODOLOGY

NOVO NORDISK A/S

Consensus EPS Estimates² ($) FINANCIAL ANALYSIS

NOVO NORDISK A/S

RATINGS HISTORY VALUATION

premium discount premium discount

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