Guess the stocks Ep. 3: What key unlocks a company's enduring moat?
Perfectly competitive firms earn zero economic profits is a classical conclusion in economics. The reason is simple: when many firms produce the same products in the same market, price wars are likely inevitable until prices are driven down to cost levels. Thus, to avoid price wars or, in other words, to gain pricing power, companies need to find ways to build a moat that protects them from competitors, such as developing unique techonologies and obtaining patent protection.
Do we have any way to identify how "wide" this moat is?
Gross margin, the percentage of a company's revenue that's retained after direct expense, is a powerful tool for measuring how "wide" a company's moat is. It can help identify whether value is being created for customers and whether that value can be kept away from other competitors. Thus, a company with consistently high gross margin is likely to be a fundamentally strong business.
Challenge Starts here>>
Pharmaceutical companies often have very high gross margins. Here are three pharmaceutical companies, A, B, and C, with their revenue and gross margin provided from 2014 to 2023. Companies A and B have shown stable revenue growth, and their gross margins have consistently remained high. In contrast, Company C has experienced significant fluctuations in both revenue and gross margin, with a noticeable decline in its gross margin in recent years.
Questions:
1) Which company do Company A, Company B and Company C refer to, respectively?
2) Which company's stock has performed the worst in the last two years, and briefly talk about why this company's stock price has underperformed.
1) Which company do Company A, Company B and Company C refer to, respectively?
2) Which company's stock has performed the worst in the last two years, and briefly talk about why this company's stock price has underperformed.
Rewards:
An equal share of 5000 points: All mooers who correctly answer question 1 and give a reasonable answer to question 2 will get an equal share of 5000 points. (e.g., If 100 mooers answer correctly, each mooer will get 50 points.)
An equal share of 5000 points: All mooers who correctly answer question 1 and give a reasonable answer to question 2 will get an equal share of 5000 points. (e.g., If 100 mooers answer correctly, each mooer will get 50 points.)
Hint:
Company A: It is an American pharmaceutical company headquartered in Indianapolis, Indiana and was found in 1876. It is known for its clinical depression drugs Prozac, Cymbalta and its antipsychotic medication Zyprexa. The company's primary revenue driver now is the diabetes drug Mounjaro.
Company A: It is an American pharmaceutical company headquartered in Indianapolis, Indiana and was found in 1876. It is known for its clinical depression drugs Prozac, Cymbalta and its antipsychotic medication Zyprexa. The company's primary revenue driver now is the diabetes drug Mounjaro.
Company B: It is a Danish pharmaceutical company headquartered in Bagsværd. Its main product is the drug semaglutide, used to treat diabetes under the brand names Ozempic and Rybelsus and obesity under the brand name Wegovy.
Company C: It is an American pharmaceutical and biotechnology corporation headquartered in New York. It develops and produces medicines and vaccines for immunology, oncology, endocrinology and neurology. The company largest products by sales last year are the COVID-19 vaccine, apixaban, palbociclib and tafamidis.
How to participate?
Drop your answers in the comment section below! Please answer all the questions!
Note: Only original submissions will be considered. Plagiarized content leads to disqualification from the event.
Drop your answers in the comment section below! Please answer all the questions!
Note: Only original submissions will be considered. Plagiarized content leads to disqualification from the event.
Event time:
Now till 17 August, 2024, 23:00 ET
Now till 17 August, 2024, 23:00 ET
For guide on checking gross margin on moomoo:
Go to Quote> Company> Financials> Financial Indicators> Gross Margin (Try it now!)
Go to Quote> Company> Financials> Financial Indicators> Gross Margin (Try it now!)
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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FortuneFavours : Q1:
Company A is Eli Lily and Company
Company B is Novo Nordisk
Company C is Pfizer
Q2:
Pfizer stock has performed the worst in the last two years is due to the following reasons
- Decline in COVID-19 vaccine demand.
- Patent Expiration: Some of Pfizer's products have lost exclusivity, which means that other companies can now produce generic versions, leading to a decrease in sales.
sociable Dingo_8604 : Company A: $Eli Lilly and Co (LLY.US)$
Company B: $Novo-Nordisk A/S (NVO.US)$
Company C: $Pfizer (PFE.US)$
$Pfizer (PFE.US)$ stock has performed the worst among the three. I believe is due to post pandemic Covid19 vaccine decline. Its success in 2019 had significantly waned off after covid became more manageable and demand for the vaccines decreased. Furthermore, many of their patented drugs have reached expiry, hence allowing more competition from other companies producing the generic ones.
On the other hand, comparing Eli Lilly and Novo Nordisk, those two have strong performances driven by their weight loss products as there is a growing demand for such therapies in the market.
BH_6730 : Company A : $Eli Lilly and Co (LLY.US)$
Company B : $Novo-Nordisk A/S (NVO.US)$
Company C : $Pfizer (PFE.US)$
Qn 2:
While Pfizer is a well-established and successful pharmaceutical company, its stock performance and revenue growth might be affected by various factors, leading to relatively weaker performance compared to Eli Lilly and Novo Nordisk. Here are some possible reasons:
1. *Dependence on COVID-19 vaccine sales*: Pfizer's revenue has been significantly boosted by its COVID-19 vaccine sales. However, as vaccination rates slow down and governments reduce their vaccine purchases, this revenue stream might decline.
2. *Patent expirations*: Pfizer faces patent expirations for some of its key products, such as Lyrica (pregabalin) and Viagra (sildenafil), which could lead to generic competition and reduced sales.
3. *Increased competition*: Pfizer's products, like Eliquis (apixaban) and Ibrance (palbociclib), face competition from newer treatments or biosimilars, potentially impacting sales.
4. *Pipeline challenges*: Pfizer's research and development pipeline might not be as strong as its peers, leading to concerns about future growth drivers.
5. *Valuation*: Pfizer's stock might be trading at a relatively high valuation compared to its peers, making it more challenging to deliver strong returns.
In contrast, Eli Lilly and Novo Nordisk have had strong growth drivers, such as:
- Eli Lilly's success with Mounjaro (tirzepatide) for diabetes and obesity
- Novo Nordisk's dominance in the diabetes and obesity markets with semaglutide-based products
Keep in mind that the pharmaceutical industry is constantly evolving, and companies' performances can change rapidly due to various factors, including new product approvals, clinical trial results, and market dynamics.
102362254 : Question 1 -
Company A: $Eli Lilly and Co (LLY.US)$
Company B:$Novo-Nordisk A/S (NVO.US)$
Company C: $Pfizer (PFE.US)$
Question 2 - Pfizer's stock has been underperforming primarily due to declining demand for its COVID-19 products, which significantly impacted its revenue. It also faces challenges from the loss of exclusivity on several key drugs.
mr_cashcow : 1)
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Company A: $Eli Lilly and Co (LLY.US)$
Company B: $Novo-Nordisk A/S (NVO.US)$
Company C: $Pfizer (PFE.US)$
2)
$Pfizer (PFE.US)$ has performed the worst among the 3 drug maker companies for the past 2 years because thank God we have mostly recovered from covid and therefore post pandemic it is expected to perform not as good since also see attached stock compare using moomoo's VS feature for more info
WanEH : my answer:
1)
Company A: $Eli Lilly and Co (LLY.US)$
Company B: $Novo-Nordisk A/S (NVO.US)$
Company C: $Pfizer (PFE.US)$
2)
$Pfizer (PFE.US)$ is the worst among the 3 companies for the past 2 years. The global has recovered from covid 19 and therefore the request for vaccine is nearly 100% stopped. This has badly hit the revenue and profit of Pfizer.
MJun15 : A: $Eli Lilly and Co (LLY.US)$
B: $Novo-Nordisk A/S (NVO.US)$
C: $Pfizer (PFE.US)$
$Pfizer (PFE.US)$ has performed the worst among the 3 stocks. This is mainly due to the reduction in demand of the COVID vaccine post pandemic, which the company's revenue relied heavily on. It also faces issues with patent expiration, therefore negatively affecting sales of their drugs due to cheaper generic alternatives from other pharmaceutical companies.
Doge-a-holic : 1. Lilly
2. Novo Nordisk
3. Pfizer
MultiBaggers : Question 1 -
Company A: $Eli Lilly and Co (LLY.US)$
Company B:$Novo-Nordisk A/S (NVO.US)$
Company C: $Pfizer (PFE.US)$
Question 2 - Pfizer's stock has been underperforming primarily due to declining demand for its COVID-19 products, which significantly impacted its revenue. It also faces challenges from the loss of exclusivity on several key drugs.
IVE Liz Kim Jiwon : 1. Lily
2. Novo Nordisk
3. Pfizer
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