Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.
Author: Rousseau

Since the beginning of this year, in the emerging global field of weight-loss pharmaceuticals, the Danish pharmaceutical giant $Novo-Nordisk A/S (NVO.US)$ has lagged behind the American pharmaceutical giant in becoming the 'stock market winner of weight-loss drugs'. $Eli Lilly and Co (LLY.US)$ Its stock price has currently significantly underperformed eli lilly. However, many analysts predict that with the upcoming financial reports of novo-nordisk and eli lilly, the 'weight-loss drug investment boom' will once again sweep the global stock market in the near future, driving the stock prices of weight-loss drug-related companies higher. The stock price of this Danish pharmaceutical giant will start catching up.

Less than a year after Eli Lilly began selling Zepbound, dubbed the "miracle drug for weight loss", the sales of this new anti-obesity drug have exceeded half of Novo Nordisk's long-standing weight-loss drug Wegovy, driving Eli Lilly's stock price up by over 54% this year. At the same time, since reaching a historic high in June, Novo Nordisk's stock price has dropped by about 25%, making it the hardest-hit large cap stock in the global stock market's "summer sell-off wave", with Novo Nordisk's American Depositary Receipt (ADR) rising by only 10% so far this year, even significantly underperforming the S&P 500 Index.

The reason Zepbound by Eli Lilly is called the "miracle drug for weight loss" mainly lies in a study published in the top international medical journal "JAMA Internal Medicine", which shows that obese patients using Eli Lilly's drug Mounjaro (whose core component is Tirzepatide, also the core component of Zepbound) had significantly more weight loss compared to patients using Novo Nordisk's drug Ozempic (whose core component is Semaglutide, also the core component of Wegovy) that combines weight loss and treatment for diabetes.

However, analysts generally now believe that Novo Nordisk will obtain greater profits in the future, and its stock may outperform Eli Lilly's in the next year. According to Wall Street analysts' 12-month target prices compiled by institutions, Novo Nordisk's stock price is expected to rise by 25% next year, while the expected increase for Eli Lilly is 13%. Analysts are bullish on Novo Nordisk's stock price core logic, as the company is taking measures to ensure it can meet the strong demand from consumers for Novo Nordisk's Wegovy, while conducting important clinical trials for its "next-generation weight-loss drug" this year, which may bring further stock price gains.

"Given the data that will be announced in the next 12 months by the company, we believe that Novo Nordisk's stock price has huge upside potential, poised to surpass market expectations and regain its absolute leading position in the weight loss and metabolic drug field," said Paul Middleton, Senior Investment Portfolio Manager at Mirabaud Asset Management.

Two companies are about to reach the next major milestone: Lilly will announce third-quarter performance on Wednesday, while Novo Nordisk plans to announce its performance next week. Investors will focus on any changes in the latest supply and demand dynamics of their bestselling weight loss drugs, drug pricing, and market share.

In recent years, Novo Nordisk, headquartered in Denmark, has attracted significant attention from global investors, partly because its weight loss drug was launched ahead of the world's top pharmaceutical companies, and its actual weight loss effect surpasses most competitors, gaining support from many global celebrities including Musk. The weight loss drug belongs to the GLP-1 class of drugs. As early as June 2021, Novo Nordisk's Wegovy under its belt had been approved by US regulators.

The market frenzy generated by this drove Novo Nordisk's stock price to skyrocket rapidly over the next few years, making this Danish pharmaceutical company the largest listed company by market cap in Europe. Lilly's approval time for weight loss drugs significantly lagged behind, only receiving approval to sell the anti-obesity drug Zepbound in November last year.

Analysts expect data to show that Novo Nordisk's Wegovy and its sister drug Ozempic are expected to generate approximately $6.8 billion in total sales in the third quarter. During the same period, analysts predict that Lilly's Zepbound and Mounjaro will generate sales of approximately $5.4 billion.

However, Novo Nordisk has also faced some obstacles itself. In September, the company's stock price fell, mainly due to disappointing mid-term trial data for its "next-generation weight loss drug" monlunabant, and a US Senate hearing on the pharmaceutical company's pricing of Ozempic and Wegovy. The Danish pharmaceutical company has long refused to comment on its stock performance compared to Lilly.

The prescription trend for Wegovy in the US market has also caused market jitters. However, weekly data may be unstable, as analyst Peter Warford from Jefferies Financial said, the latest data on Wegovy's starting dose is "only slightly lower than before the sudden drop."

Investors are also concerned about the manufacturing capacity of this extremely strong-demand drug. Jared Holtz, Medical Care Stock Strategy Analyst at UBS Group, said, the market has very high expectations for the demand for weight loss drugs in the coming years, which means sustainable manufacturing capacity is needed. "If this is not achieved, then some of the market's predictions for the two companies are at risk," he said.

In order to accelerate the expansion of the production capacity of weight loss pharmaceuticals, Eli Lilly and Co has invested tens of billions of dollars in new factories and existing production facilities. As of this month, US regulatory agencies have stated that Eli Lilly's Zepbound and Mounjaro are no longer in severe shortage.

Meanwhile, Novo-Nordisk plans to acquire three manufacturing plants, despite market criticism of these transactions on antitrust grounds. The company stated in an email declaration that it believes the deal is not anti-competitive in nature, adding that it is unaware of these factories producing any similar GLP-1 products of competitors, hence there is no antitrust threat.

Investors who are anticipating a resurgence in growth for Novo-Nordisk stocks have also mentioned the late-stage research results of the company's another experimental weight loss drug, CagriSema, which are expected to be announced later this year.

This experimental weight loss drug combines the drug in Wegovy with another weight loss compound. UBS Group AG's stock analyst Joe Walton expects Novo-Nordisk's stock price to potentially rise by more than 10%, depending on the results.

Although Novo-Nordisk is the first pharmaceutical company to push weight loss drugs to the global consumer market, Eli Lilly's stock performance has actually been better in the long term, with an annual ROI of about 53% over the past five years, compared to Novo-Nordisk's 35%.

As other weight loss drug developers compete to enter the weight loss drug market, the valuation levels of these two companies have both seen a significant decline recently. Novo-Nordisk's latest PE ratio is as high as 28x, making this Danish pharmaceutical giant about 34% cheaper than Eli Lilly — although it still matches its average expected PE ratio over the past five years.

Midleton from Mirabaud mentioned that the valuations of Novo-Nordisk and Eli Lilly have recently dropped significantly, providing a very 'attractive entry point' for long-term stock market investors.

Editor/Jeffy