Seeking Alpha: Novozymes And The High Cost Of Greatness

When I first started the process of refreshing and updating my research on Danish enzyme specialist Novozymes (OTCPK:NVZMY), I was really hoping that the end result would be an undervalued and appealing investment opportunity. This is a company that I like a lot and a stock that I want to like. Now, readers can carp about whether wanting to like a company pollutes the research/analysis process, but I see no reason to hide the fact that I think Novozymes is a well-run company with a strong leadership position in a sizable but growing industry.

Valuation is the issue. I realize that investors should expect to pay up for quality, and Novozymes's nearly 50% market share in the industry and strong history of ROIC generation are certainly marks of quality, but I'm not comfortable with the sort of growth/certainty that appears to be factored into the valuation today. Investors less sensitive to valuation may find more to like here (particularly after the 20% decline from the 52-week high), as this is the sort of situation where price is really my only major hang-up.

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Novozymes And The High Cost Of Greatness