Senseonics Holdings, Inc. (IMPORTANCE) and Novo Nordisk A / S (NVO) are two established players in the medical industry. SENS is a medical technology company focused on the design, development and marketing of glucose monitoring systems. NVO develops and manufactures pharmaceutical products. NVO is based in Denmark and operates in two segments: Diabetes and Obesity and Biopharm.
Diabetes is increasing at an alarming rate in the West, accelerated by the distant lifestyle and home routines. As a result, pharmaceutical companies have experimented with innovative drugs to cure and treat the disease. Many companies have reported promising results from their clinical studies, suggesting that a drug used to treat diabetes may soon be available in the market.
The global diabetes drug market is expected to grow in size $ 78.30 billion through 2026, up 6.1% CAGR.
While SENS grew by 312.5% last year, NVO achieved a return of 25.5%. In terms of performance over the past six months, SENS is a clear winner with a return of 461.7% versus 16.7% for NVO. But which of these two stocks is the better choice now? Let’s find out.
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On February 24, NVO and the University of Toronto announced an investment of DKK 200 million (US $ 32.80 million) to build the Novo Nordisk network for healthy populations. The network is expected to focus on new ways to support a healthier urban population by leveraging the university’s leading expertise in public health research and education programs to advance the global fight against diabetes and other serious chronic diseases .
On February 1, SENS announced that Ascensia Diabetes Care had started sales and marketing activities for the Eversense XL CGM system in key European markets as part of the strategic partnership agreement announced in August 2020.
Current financial results
Total SENS revenue increased 7,805.6% year over year to $ 2.90 million for the first quarter ended March 31, 2021. The net loss was $ 241.51 million, a decrease of 485.9% year over year. The company’s loss per share was $ 0.68, a decrease of 223.8% year over year.
In the first quarter, which ended March 31, 2021, NVO’s total sales were DKK 33.80 billion (USD 5.54 billion), a decrease of 0.21% compared to the same quarter of the previous year. The company’s net profit increased 39% year over year to DKK 12.62 billion (USD 2.10 billion). EPS increased by 7.92% year-on-year to DKK 5.45.
Past and expected financial performance
SENS sales have increased 220.3% over the past five years. Analysts expect the company’s revenue to grow 179.2% in fiscal 2021 and 138.7% in fiscal 2022. EPS is expected to grow 60% for the current quarter ended September 30 and 3.9% in fiscal 2021. EPS is expected to grow 32.1% annually for the next five years.
By comparison, NVO’s sales grew 2.9% over the past five years. Revenue will increase 10.8% for the current quarter ending June 30, 2021 and 9.8% for 2021. The company’s EPS is projected to increase 9.7% for the quarter ended June 30, 2021 and 9.8% for the 2021 fiscal year. The EPS of the NVO is expected to increase by 1.3% annually for the next five years.
NVO’s revenue of $ 20 billion for the past 12 months is 2.58 times ANET’s revenue of $ 7.76 million. Also, NVO is more profitable with a net profit margin of 33.78% versus the negative value of SENS.
The ROA and EBIT margins of NVO of 24.83% and 41.90%, respectively, can be easily compared with the negative values of SENS.
Regarding forward EV / S., SENS is currently trading at 52.41x, 84.1% higher than NVO’s 8.31x.
SENS ‘non-GAAP forward P / E ratio is negative. NVO, on the other hand, is currently trading at 25.08 times its EPS estimate for 2021.
So NVO is the cheaper share.
NVO has an overall A rating which equates to a strong buy in our own business POWR ratings System. However, SENS has an overall rating of F which equates to a strong sale. The POWR ratings are calculated using 118 different factors, each weighting being optimized to improve overall performance.
SENS has the grade D for quality. This is justified by the negative ROA. NVO has an A grade for quality. The ROA of 52.46% achieved after 12 months is favorable compared to the negative industry average.
SENS has an F rating for sentiment. This is warranted as analysts expect the company’s EPS to remain negative through at least 2022. NVO has a B-grade for Sentiment, which is in line with its favorable analyst sentiment as well as its revenue and earnings outlook.
Of the 57 shares in the Medical diagnostics / research Industry, SENS ranks 54th. In comparison, NVO ranks fourth out of 229 stocks in the Medical pharmaceuticals Industry.
In addition to the POWR ratings just highlighted, both SENS and NVO are rated for momentum, value, stability and growth. click Here to see the additional ratings for SENS. Get all NVO ratings too Here.
Despite SENS ‘impressive sales growth last quarter, the company has yet to make a profit. The company’s non-GAAP forward P / E multiple is also negative, which implies decreasing earnings potential. Hence, NVO seems like a better investment here due to its lower valuation and superior financial data.
Our research shows that betting on stocks with an overall POWR rating of Buy or Strong Buy increases the chances of success. Click here and here to learn about other top stocks in the medical diagnostics / research industry. Click here to find out more about the top rated stocks in the medical pharma industry.
Click here to read our Health Sector Report for 2021
NVO shares were trading at $ 78.92 per share on Friday afternoon, up $ 0.10 (+ 0.13%). Since the beginning of the year, NVO has gained 14.11%, while the benchmark index S&P 500 has risen by 12.84% over the same period.
About the author: Ananyo Guha Niyogi
Ananyo’s keen interest in capital markets, asset management and financial supervision led him to pursue a career as an investment analyst. Its goal is to train individual investors by making complex financial problems easy to understand. More…