2 Beaten-Down Stocks Primed for a Comeback

Group 1: Novo Nordisk - Novo Nordisk's stock has become attractive after a significant decline due to disappointing financial results and clinical setbacks, despite strong revenue growth [3][4] - The company's revenue for the first half of the year increased by 16% year over year to 154.9 billion Danish kroner ($24.3 billion), with earnings per share (EPS) rising by 23% to 12.49 DKK ($2) [4] - Novo Nordisk is trading at 13.3 times forward earnings, below the healthcare industry average of 16.4, indicating a favorable valuation relative to its growth potential [5] - The company is expected to maintain or accelerate revenue growth through next-generation diabetes and weight management medicines, including CagriSema and Amycretin [6][7] - Recent label expansions for existing products, such as Rybelsus and Wegovy, could add billions in sales, enhancing the company's revenue prospects [8][9] Group 2: Vertex Pharmaceuticals - Vertex Pharmaceuticals has faced clinical setbacks, including the abandonment of a type 1 diabetes treatment and a failed acute pain therapy, but remains financially strong [10] - The company's second-quarter revenue grew by 12% year over year to $2.96 billion, supported by its monopoly in cystic fibrosis therapies [11] - Vertex has significant pricing power due to its dominant market position, allowing for continued growth despite a limited patient base [12] - The company plans to submit applications for regulatory approval for three new medicines within the next 12 months, which could enhance its pipeline [13][14] - Recent approvals, such as Journavx and Casgevy, are expected to further strengthen Vertex's financial results, with a forward price-to-earnings (P/E) ratio of 19.7 reflecting its premium valuation [15][16]