Why Novo Nordisk A/S Stock Dropped 13.6% in October

By Brian FeroldiMarketsFool.com

Image source: Getty Images.

Continue Reading Below

What happened

Novo Nordisk's (NYSE: NVO) investors had an October they'd rather forget. Shares of the diabetesgiant dropped by more than 13% during the month, according to data fromS&P Global Market Intelligence

NVOYCharts


More From Fool.com

Forget GE! Heres how to play the largest growth opportunity in history

Forget Apple! Heres a Better Stock to Buy

He Made 21,078% Buying Amazon. Heres His New Pick


So what

As you can see, everything was going just fine for Novo in October, but that all changed after its third-quarter

While the results themselves were decent

However, the challenging reimbursement environment caused management to pull back on its full-year growth projections. Updated guidance calls for revenue togrow by 5% to 6%, which is down a smidge from its prior outlook. The lower-than-hoped-for revenue growth will also hit operating profits, too, with new projections calling for constant currency growth of 5% to 7%, down from its prior outlook of 5% to 8%.

If that wasn't bad enough, management also greatly lowered itslong-term operating profit growth target. It previously had been calling for annual growth of 10% per year, but itnow expects that figure to just be 5%.

Now what

Novo faces some steep competition in the diabetes space from the likes ofEli Lilly and Sanofi, both of which have struggled with growth issues

The best way for Novo to win in the long-term is for it to continue to develop innovative products. Thankfully, the company has a long history of doing just that, and its current pipeline offers reasons for optimism. The recent launches ofTresiba andRyzodeg prove that the company can still innovate, and it also has a handful of drugs pending regulatory review right now. That should allow Novo to remain the top dog in this massive

10 stocks we like better than Novo Nordisk
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks

Click here

*Stock Advisor returns as of November 7, 2016

Brian FeroldiLike this article? Follow him onTwitter where he goes by the handle@Longtermmindsetor connect with him on LinkedIn to see more articles like this.

The Motley Fool recommends Novo Nordisk. Try any of our Foolish newsletter services free for 30 daysconsidering a diverse range of insightsdisclosure policy

Continue Reading Below