How many times will a company be punished for the same reason?
Funny how the market reacts the same way in both directions, always going too far!
When a company is doing well, and they generate an EPS that they had never generated before, expectations are so high that they are generated above the analysts' expectations (even if the expectation is that it will grow much more than it has already achieved) and the valuation is usually much higher than the times profits that the company has been trading historically (it is as if something that has always been traded in the past has been overvalued). (it is as if something that has always been valuable has been hidden and everyone suddenly discovered it) the company does not stop rising and when you make numbers you stop to think and it would only make sense to buy if the company doubles or triples the turnover (which comes from being at its maximum) even above analysts' estimates.
However, when it is the other way around, a company is punished 100 times for the same reason, and the punishment is usually even higher than the real market value at an initial moment, it is as if the shareholders were in depression.
In both scenarios it was and this $NOVO B (+1.26%) around 2022-23 was the bomb, a real cannon that did not stop rising, it was trading at 40-60 times profits and the expectations did not stop rising, everyone was buying.
Today it has been punished in less than a week by more than 30% for a series of reasons that have been repeated over and over again, once again investors are going too far away from what it should be, and only value it at 14 times earnings, estimating even worse conclusions than the analysts themselves, it comes from falling almost 75% without being anywhere near a bankruptcy situation being one of the most reliable and reliable companies in its sector and even with tariffs of 25-30% still has a competitive product for the market despite the tariffs (Novo Care from $499/Month) 🙄
All it takes is a simple script change and recovery of confidence for this company to take off and return to fairer prices, but unfortunately that won't happen until a medium-long period of time or a series of good news strung together that results in a recovery of confidence, I guess that's how it works sometimes ⏱️
