UBS Called Novo Nordisk a 'Value Trap.' Here's the Other Side of That Argument.
UBS analyst Michael Yee called Novo Nordisk a value trap, but still sees a turnaround playing out over time.
Overview
UBS analyst Michael Yee clearly preferred Eli Lilly (NYSE: LLY) over Novo Nordisk (NYSE: NVO) in a recent discussion with CNBC. Describing Eli Lilly as a growth company and Novo Nordisk as a value stock, he suggests that investors are more interested in growth today. While Yee may not be wrong about investors' preference for growth, he may be going too far by calling Novo Nordisk a value trap. Here's why.
A value stock is a stock that is trading cheaply relative to its own history, the market, or other companies in the same industry. Often, a value stock is facing business headwinds of some kind. A value trap is a stock that has value characteristics, but that is unlikely to overcome the headwinds it faces. Or at least, it isn't likely to overcome them within a reasonable time frame.
Image source: Getty Images.
Details
Source
Originally published at www.fool.com.