#Morningstar  #NovoNordisk #StockInvesting

Managers of highly rated funds own these foreign stocks. Should you?

00:00 Introduction
00:30 Novo Nordisk NVO
01:10 Novartis NVS
01:46 UBS Group UBS

Susan Dziubinski: Hi. I’m Susan Dziubinski with Morningstar. To generate new stock ideas, we frequently peer into the portfolios of the industry’s top concentrated fund managers known for their stock-picking prowess. Today we’re sharing three stocks that are popular among managers of concentrated international-stock funds that earn our top Morningstar Medalist Rating of Gold. None of these international stocks looks like a buy today according to Morningstar’s metrics. But they could be great candidates to add to a watchlist of international stocks.

The first stock that the best international fund managers like is Novo Nordisk. Denmark-based Novo is the leading provider of diabetes-care products in the world; its portfolio includes popular diabetes and weight-loss drugs Ozempic, Rybelsus, and Wegovy. Morningstar assigns the firm a wide economic moat rating. Although competition in the field is heating up, we expect Novo to maintain its dominant position as an innovator in the treatment of diabetes and obesity. We see strong growth ahead for the firm, as diabetes rates are expected to soar in the coming decades. We think Novo’s US-traded ADRs are worth $84 and they’re selling well above that price.

Six of our seven best international fund managers like Novartis. This Swiss pharmaceutical giant maintains a diversified product portfolio, with heart medicine Entresto and plaque psoriasis treatment Cosentyx as the largest contributors to sales. Morningstar assigns Novartis a wide economic moat based on the strength of its patents, economies of scale, and powerful distribution network. We expect new products to continue to mitigate generic competition due to patent losses, and cost-cutting will alleviate the pressure on margins from lost high-margin drug sales. We think Novartis’ ADRs are worth $98 apiece.

The final stock the best international fund managers like is UBS Group; five managers from our list of seven own the stock of this Swiss bank. UBS has a daunting task before it: The integration of Credit Suisse, which it took over in 2023. Morningstar expects UBS to shut down or dramatically reduce some business units to retain revenue, which will help absorb restructuring costs. But by 2027, we think the consolidated wealth-management and asset-management businesses will be even more dominant than they were for UBS as a stand-alone entity. We think UBS stock is worth $31.50.

For more stock ideas, be sure to subscribe to Morningstar’s channel and visit Morningstar.com.


Morningstar director Damien Conover, strategist Karen Andersen, and analyst Johann Scholtz provided the research behind this segment.



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