Happy Sunday to everyone on The Street.

Novo Nordisk (CPH: NOVO-B) may have a lead on the weight loss drug market due to its first-mover advantage with Ozempic and Wegovy, but it’s no longer a single-horse race.

Earlier this week, we saw that the popularity of Eli Lilly’s (LLY) Zepbound has surged to the extent that it has had to sue six entities for selling products claiming to contain tirzepatide, the active ingredient in its weight loss drugs.

We also saw shares of Zealand Pharma (CPH: ZEAL) pop on Friday, fueled by positive trial results for its experimental weight-loss injection, which could compete with popular GLP-1 drugs.

In addition to competitors circling like sharks, Novo Nordisk CEO Lars Fruegaard Jorgensen will be testifying in front of the Senate on the high costs of Ozempic and Wegovy after Senator Sanders threatened to subpoena the company.

As the saying goes, heavy is the head that wears the GLP-1 crown. Let’s see if Novo Nordisk can maintain its dominance while under attack from all fronts.

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ICYMI: Here’s what drove the markets last week and what to keep an eye out for in the coming week.

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Leaving the Nest

International Expansion

Analysts at HSBC (HSBC) are bullish on Chinese companies, but they believe these firms need to capitalize on opportunities abroad. 

According to the financial giant, only about 12% of China-listed businesses’ revenue came from outside the country in 2023. This pales in comparison to major Japanese companies which derived roughly 35% of their revenue from abroad in the same period. 

HSBC highlighted multiple sectors where it sees potential, including electrical equipment and pharmaceuticals.

The Varsity Team

The financial institution laid out some top picks for investors to capitalize on the potential. 

Anker Innovations (300866-SZ) makes consumer electrical equipment, including chargers. The company creates items compatible with Apple (AAPL) and Google (GOOG) products. Anker’s US Amazon (AMZN) sales rose by 65% year-over-year in April.

Snibe (300832-SZ) is HSBC’s preferred pharmaceutical play. The company makes lab equipment. The bank expects Snibe to have about a 30% revenue compound annual growth rate outside of China through 2026. 

Investors can get exposure to both of these stocks through the iShares MSCI China ETF (MCHI).

Tariff Troubles

HSBC acknowledges that tariffs from the US and EU could expand and dent international growth for China-listed companies. 

But analysts at the financial firm think the risks are overstated. They expect that even in a more protectionist environment, China, the US, and Europe will continue to trade with each other.

HSBC also believes Chinese companies can gain ground by building factories abroad, which could help them avoid tariffs and generate goodwill by creating jobs.

While the financial firm is giving the green light to stocks in China, investors have been less enthusiastic. The Shanghai Stock Exchange Composite Index is down about 7% over the last year, underperforming the S&P 500 by a wide margin.

A Tale of Two Alzheimer's Treatments

Some Healthy Competition

Typically, companies don’t view rising competition as a good thing. In the case of biotechnology company Biogen (BIIB), the opposite might be true.

Biogen partnered with pharmaceutical company Eisai (ESAIY) to develop Leqembi, a drug to treat Alzheimer’s. Leqembi was approved in 2023 but hasn’t seen much success so far. 

That could all change now that Eli Lilly’s (LLY) drug donanemab has been supported by FDA advisers. A decision on its official approval is expected by the end of 2024.

Increasing Awareness

Increasing average life expectancies and the resulting rise in dementia haven’t caused treatments for the disease to explode as expected. 

Leqembi saw only $19 million in Q1 revenue, a far cry from the billions of dollars in annual sales Wall Street expects from the sector. 

With Eli Lilly entering the scene, disease awareness and treatment education are expected to rise. While both companies now have some stiff competition, experts believe it will be a net positive for Leqembi.

Inflow of Investment

Analysts expect that having two drugs on the market will drive investors and companies to pursue more Alzheimer’s research. While both Leqembi and donanemab are currently limited in their effectiveness, an influx of capital could push the drugs toward further innovation. 

In a free market, competition typically results in better products and cheaper prices. In this case, it should also boost the pharma companies with some public awareness. If Leqembi turns profitable, these stocks could see significant returns.

Morgan Stanley’s Summer Winners

Broadcom

Morgan Stanley (MS) recently came out with a list of overweight stocks that look attractive now and through the summer. 

Semiconductor company Broadcom (AVGO) made the list as an alternative to Nvidia (NVDA). Morgan Stanley analyst Joseph Moore sees Broadcom’s AI progress and its acquisition of VMWare as tailwinds to drive its stock forward over the coming months. He expects the company to post stable cash flows following efforts to cut costs and improve operational efficiency. 

Shares are up 66% YTD and the tech company recently announced an upcoming stock split.

Toast

Restaurant tech company Toast (TOST) is also on the investment bank’s radar. Analyst Josh Baer thinks it has plenty of room to grow. 

The analyst specifically cited its leadership, capability to command market share, and expanding monetization as causes to be bullish. Baer also touted the company's new products and verticals as catalysts for growth. 

The analyst recommends buying any dips in the stock’s price. It’s up 33% this year.

Arista Network

Analyst Meta Marshall thinks Arista Networks (ANET) is performing extremely well right now. The computer networking company’s recent IPO anniversary event focused heavily on the company’s past, future, and AI. Its ethernet switch is poised to substantially contribute to AI networking. 

Arista’s revenue is up 10x over the past decade and the stock has risen over 46% YTD, but Marshall believes it has potential for more gains. 

Morgan Stanley is confident each of these stocks is well-positioned to provide investors with returns over the next few months.

TOGETHER WITH STATUS

Escape into a World of Crystal-Clear Sound with Status Audio's Between 3ANC Earbuds

These are not your ordinary earbuds. They’re your gateway to portable audio so immersive you'll feel the music coursing through your veins — wherever you choose to listen.

Why gamble on your sound experience when you can guarantee bliss with the OG three-speaker wireless earbuds? It's a promise of unparalleled clarity and depth, all within a price that keeps your wallet at ease.

• Crafted for the Connoisseur. Status Audio’s award-winning triple-driver acoustic system completely changed the game. Three speakers in each ear harmonize to deliver depth, clarity, and emotion in every note. Whether you're powering through a workout or lost in the storyline of your favorite podcast, the Between 3ANC transforms sound into a three-dimensional experience.

• Your Soundtrack, Elevated. Status believes great sound shouldn't be a luxury. It's a necessity for those who crave the thrill of a bass drop, the drama in a poignant podcast, or the vibes from a live concert recording. With the Between 3ANC, you don't just listen; you live your audio. 

• Bonus: Status is offering an exclusive $20 discount. Just for you. Use at checkout and step into the world of elite sound without the elite price tag. Don't Just Hear. Feel. Your search ends here. The Between 3ANC Earbuds aren't just the best choice—they're the only choice for those who demand more from their music.

Claim Your Sound Revolution Now

Last Sunday’s Poll Results

Which cruise stock are you bullish on?

🟨🟨🟨⬜️⬜️⬜️ Carnival (CCL)

🟩🟩🟩🟩🟩🟩 Royal Caribbean (RCL)

🟨🟨🟨⬜️⬜️⬜️ Norwegian Cruise Line (NCLH)

🟨🟨🟨🟨⬜️⬜️ Viking (VIK)

Will Nvidia (NVDA) keep climbing throughout the rest of 2024?

🟩🟩🟩🟩🟩🟩 Yes

🟨⬜️⬜️⬜️⬜️⬜️ No

Which stock do you think will outperform over the next 12 months?

🟩🟩🟩🟩🟩🟩 NiSource (NI)

🟨🟨🟨🟨🟨⬜️ Entergy (ETR)