Nick Kunze, senior portfolio manager at Sanlam Private Wealth
Buy: Novo Nordisk
The global pharmaceutical company operates through two business segments: diabetes and obesity care, and biopharmaceuticals. It is well known for its celebrity-favourite wonder drug Ozempic. The share price has suffered a recent fall, dropping by 56% from a year ago and falling 30% since the start of 2025 as more competition comes to the market. Yet the numbers suggest that Novo Nordisk remains highly attractive, with revenues expected to grow from 330-billion Danish kroner in 2025 to 520-billion kroner by 2029, alongside earnings before interest and tax margins projected at about 50%. Valuation metrics support the bullish case. Its forward earnings multiple is forecast to decline from 17 in 2025 to under 10 by 2029. Dividend yields are set to increase steadily, with free cash flow projected to reach 174-billion kroner by 2029. Novo Nordisk remains a premier name in global health care, offering both resilience and upside for investors seeking quality growth and a defensive stance in a volatile environment.
Sell: Bristol Myers Squibb
Bristol Myers Squibb (BMY) is a global biopharmaceutical company engaged in the discovery, development and delivery of transformational medicines for serious diseases. As US markets hit record highs, BMY is down 18% year to date. To understand this underperformance, investors need to look at its patent pipeline. BMY is facing one of the steepest upcoming patent cliffs in the pharma sector. Its blockbuster drugs Eliquis (a blood thinner) and Opdivo (a cancer immunotherapy) will lose exclusivity between 2026 and 2028. Together, they account for nearly 60% of BMY’s total revenues. Add in some poorly timed acquisitions: more than $16bn was spent in late 2023 to acquire Karuna Therapeutics and RayzeBio. These were expensive, textbook-speculative bets on late-stage pipelines, overpaying for uncertain future cash flows. At an earnings multiple of 17.5 and a price-to-book of 5.5, the stock remains expensive compared with its peer group and is a sell at current levels.
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