PGIM Jennison Health Sciences Fund recently released its third quarter 2024 investor letter. A copy of the letter can be downloaded here. Given concerns regarding the decreasing pace of U.S. employment and the associated concerns that U.S. interest rates may have been maintained at levels higher than necessary to moderate the pace of inflation, U.S. equity markets fluctuated during the summer and partially reversed their year-to-date gains. The S&P 1500 Health Care Index appreciated 6.1% in the third quarter, outperforming the S&P 500, which gained 5.9%. While the fund advanced in the quarter, it underperformed the index. Stock selection within medtech and pharmaceuticals contributed to the most value. Relative performance was negatively impacted by security selection in biotechnology and health care providers and services, as well as underweights in life sciences tools and services. In addition, please check the fund’s top five holdings to know its best picks in 2024.
PGIM Jennison Health Sciences Fund highlighted stocks like Novo Nordisk A/S (NYSE:NVO), in the Q3 2024 investor letter. Novo Nordisk A/S (NYSE:NVO) engages in the research and development, manufacture, and distribution of pharmaceutical products. The one-month return of Novo Nordisk A/S (NYSE:NVO) was 4.98%, and its shares gained 6.88% of their value over the last 52 weeks. On December 11, 2024, Novo Nordisk A/S (NYSE:NVO) stock closed at $111.69 per share with a market capitalization of $491.943 billion.
PGIM Jennison Health Sciences Fund stated the following regarding Novo Nordisk A/S (NYSE:NVO) in its Q3 2024 investor letter:
“Novo Nordisk A/S (NYSE:NVO) is a Danish pharmaceuticals company focused on diabetes, obesity, NASH hemophilia, CVD, and growth disorders. Novo Nordisk has transitioned into the early innings of an accelerating, highly durable growth cycle anchored by its best-in-class GLP-1 portfolio in diabetes and obesity, with potential to further penetrate other cardiometabolic diseases – all are large total addressable markets (TAMs). We believe Novo’s transformative, new product growth inflection is still underappreciated, both in magnitude and durability. Novo is among the top 2 fastest-growing biopharma companies globally, with game-changing new drugs in large markets (diabetes, obesity), manageable competitors (mostly duopoly dynamics with Eli Lilly over the foreseeable future), and exposure to fast-growing ex-U.S. markets (>50% of sales, growing at double digits year-over-year). Novo’s research and development (R&D) engine is historically highly productive and focused, with several next-gen programs in diabetes, obesity, NASH, and Alzheimer’s set to read out over the next 3-4 years – an active and compelling pipeline catalyst setup given most are not priced in for success. Pipeline readouts are highly active for 2024-2025, with what we believe is a compelling risk-reward setup. Novo raised 2024 sales growth guidance again with their 1Q results in May. Obesity market estimates are likely to keep rising as the next wave of trials in comorbidities readout, validating the socioeconomic value of these drugs and expanding the addressable market further; best-case SELECT data also move the debate from lifestyle drugs to lifesavers, further compounding the value of the comorbidity readouts. Novo’s top-tier management, especially on the scientific side of the organization, gives us confidence in their ability to sustainably manage this pace of growth. Modest weakness can be attributed to a broader market trend of growth-related equities trading lower during that period. The stock has been volatile due to near-term supply constraints that are limiting Wegovy growth in 2024, but we expect the stock to continue to outperform, driven by the upcoming Phase 3 readout for their next-gen obesity and diabetes drug, CagriSema, and by the continued ramp of supply organically and inorganically via the Catalent acquisition.”
An elderly couple receiving insulin from a pharmacist, representing healthcare company’s successful pharmaceutical products.
Novo Nordisk A/S (NYSE:NVO) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 61 hedge fund portfolios held Novo Nordisk A/S (NYSE:NVO) at the end of the third quarter which was 67 in the previous quarter. In the first nine months, Novo Nordisk A/S (NYSE:NVO) delivered 24% sales growth and 22% operating profit growth. While we acknowledge the potential of Novo Nordisk A/S (NYSE: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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Novo Nordisk A/S (NYSE:NVO) and shared the list of most profitable pharmaceutical stocks. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.